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Preface
About this publication
XYZ Holdings (Singapore) Limited
This publication includes the following components:
The illustrative financial statements are an illustration of the annual financial statements of a
Singapore-incorporated listed company, XYZ Holdings (Singapore) Limited, prepared in
accordance with:
Preface
Singapore Financial Reporting Standards (FRS)
For financial periods beginning on or after 1 January 2014, a number of new and revised
FRSs apply.
A list of the FRSs and INT FRS is provided in Appendix B, which also provides a brief summary
of the major differences with International Financial Reporting Standards (IFRS).
This publication reflects the requirements of the FRSs as at 31 August 2014. No new
accounting standards that would be applicable to financial statements covering periods
beginning on 1 January 2014 are expected. Nevertheless, the situation needs to be
monitored for any developments that may affect 2014 financial statements.
The following FRSs have not been dealt with in this publication:
Preface
Singapore Financial Reporting Standards (FRS) (continued)
Abbreviations
The following abbreviations are used in this publication:
BC
CA
FRS
INT FRS
Interpretations of FRSs
FRS AG
FRS IG
IAS
IFRS
SSA
SGX
Contents
Page
General information ................................................................................................................ 1
Directors report...................................................................................................................... 2
Statement by directors ............................................................................................................ 7
Independent auditors report ................................................................................................. . 8
Consolidated income statement ............................................................................................. 10
Consolidated statement of comprehensive income .............................................................. ....11
Balance sheets ..................................................................................................... 16
Statements of changes in equity ............................................................................................ 18
Consolidated cash flow statement .......................................................................................... 26
Notes to the financial statements
1.
2.
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
Contents
Page
Notes to the financial statements (continued)
2.26 Employee benefits ................................................................................................ 68
2.27 Leases ................................................................................................................. 71
2.28 Non-current assets held for sale and discontinued operations ................................ 71
2.39 Revenue .............................................................................................................. 72
2.30 Taxes .................................................................................................................. 73
2.31 Share capital and share issuance expenses ............................................................ 75
2.32 Treasury shares ................................................................................................... 75
2.33 Contingencies ......................................................................................................75
3.
3.2
4.
5.
6.
7.
8.
9.
Contents
Page
Notes to the financial statements (continued)
28. Provisions ................................................................................................................... 137
29. Deferred capital grants ................................................................................................ 138
30. Loans and borrowings .................................................................................................. 139
31. Trade and other payables ............................................................................................. 142
32. Other liabilities ............................................................................................................ 143
33. Share capital and treasury shares ................................................................................. 144
34. Other reserves ............................................................................................................. 145
35. Employee benefits ........................................................................................................ 146
36. Related party transactions ........................................................................................... 149
37. Commitments .............................................................................................................. 152
38. Contingencies .............................................................................................................. 155
39. Fair value of assets and liabilities .................................................................................. 156
40. Financial risk management objectives and policies ......................................................... 173
41. Capital management .................................................................................................... 187
42. Segment information ................................................................................................... 189
43. Dividends .................................................................................................................... 194
44. Events occurring after the reporting period ................................................................... 195
45. Authorisation of financial statements for issue .............................................................. 195
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
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
Company secretary
SGX 1207.1
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
Share registrar
SGX 1207.3
[Address]
Auditor
SGX 713.1
Directors report
Diectors report
The directors are pleased to present their report to the members together with the audited
consolidated financial statements of XYZ Holdings (Singapore) Limited (the Company) and its
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.
CA 201.6A
1.
CA 201.6A.a
CA 201.6.a
Directors
CA 201.5
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 Companys Articles of Association, Jee Kim
Leng, Pek Que Ru and See Tong Tong retire and, being eligible, offer themselves for reelection.
2.
CA 201.6A.g
CA 201.6.f
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.
3.
CA 201.6A.h
CA 201.6.g
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:
Direct interest
Name of director
At the
beginning of
financial year
or date of
appointment
At the end of
financial year
340,000
Deemed interest
At the
beginning of
financial year
or date of
appointment
At the end of
financial year
345,000
2,100,000
2,100,000
5,000
10,000
50,000
60,000
43,000
60,000
Directors report
3.
Direct interest
Name of director
At the
beginning of
financial year
or date of
appointment
At the end of
financial year
Deemed interest
At the
beginning of
financial year
or date of
appointment
At the end of
financial year
10,000
10,000
25,000
25,000
There was no change in any of the above-mentioned interests in the Company between
the end of the financial year and 21 January 2015.
SGX 1207.7
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.
4.
CA 201.8
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.
5.
Options
CA 201.11.b and
11B
SGX 853
The committee administering the employee share option plans comprise three directors,
Musa Nasir Osman, Pek Que Ru and See Tong Tong.
SGX 852.1.a
CA 201.11.b-d
CA 201.11.b-d
CA 201.12.a
Directors report
5.
Options (continued)
Details of all the options to subscribe for ordinary shares of the Company pursuant to the
employee share option plans as at 31 December 2014 are as follows:
Expiry date
Number of options
31 December 2015
1.05
45,000
30 November 2016
1.18
55,000
1 January 2017
1.22
100,000
31 December 2018
1.26
125,000
30 June 2019
1.30
200,000
Total
525,000
Details of the options to subscribe for ordinary shares of the Company granted to
directors of the Company pursuant to the Senior Executive Option Plan are as follows:
Options
granted
during
financial
year
Aggregate
options granted
since
commencement
of plan to end of
financial year
15,000
105,000
(35,000)
60,000
22,000
75,000
(15,000)
60,000
37,0001
180,000
(50,000)
120,000
Name of director
Total
CA 201.12.b
Aggregate options
exercised since
commencement of
plan to end of
financial year
SGX 852.1.b.i
Aggregate
options
outstanding as
at end of
financial year
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
year:
SGX 852.2
No options have been granted to the controlling shareholders of the Company and their
associates
SGX 852.1.b.ii
No participant other than the two directors mentioned above has received 5% or more
of the total options available under the plans
SGX 852.1.b.iii
No options have been granted to directors and employees of the holding company and
its subsidiaries
SGX 852.c.i
SGX 852.1.c. ii
No options that entitle the holder to participate, by virtue of the options, in any share
issue of any other corporation have been granted
CA 201.11
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:
Reviewed the audit plans of the internal and external auditors of the Group and the
Company, and reviewed the internal auditors evaluation of the adequacy of the
Companys system of internal accounting controls and the assistance given by the
Group and the Companys management to the external and internal auditors
Reviewed the quarterly and annual financial statements and the auditors 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 Companys 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 Limiteds Listing Manual
The AC, having reviewed all non-audit services provided by the external auditor to the
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 Companys management, at least once a
year.
Further details regarding the AC are disclosed in the Report on Corporate Governance.
SGX 1207.6.b
Directors report
7.
Auditor
Ernst & Young LLP have expressed their willingness to accept reappointment as auditor.
On behalf of the board of directors:
____________________________
___________________________
Director
Director
CA 201.5
27 February 2015
Commentary:
Section 201B (5) of the Companies Act requires a description of the nature and extent of the
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.
CA 201B.5
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)
CA 201.15.a
CA 201.15.b
(ii)
at the date of this statement, there are reasonable grounds to believe that the Company
will be able to pay its debts as and when they fall due.
CA 201.15.c
___________________________
___________________________
Director
Director
27 February 2015
Commentary:
FRS 1 uses the terms statement of financial position and statement of cash flows. However, an
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 auditors opinion
expressed in the auditors report as well.
FRS 1.10
SSA 700.22,
CA 207.1
SSA 700.39
We have audited the accompanying financial statements of XYZ Holdings (Singapore) Limited (the
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.
SSA 700.23
SSA 700.25
Management is responsible for the preparation of financial statements that give a true and fair view in
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.
SSA 700.26
Auditors Responsibility
SSA 700.28
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted
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
financial statements. The procedures selected depend on the auditors 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 entitys 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 entitys
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.
SSA 700.31
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
SSA 700.33
Opinion
SSA 700.34
In our opinion, the consolidated financial statements of the Group and the balance sheet and statement
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.
SSA 700.35
CA 207.2.a
SSA 700.38
In our opinion, the accounting and other records required by the Act to be kept by the Company and by
those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in
accordance with the provisions of the Act.
CA 207.2.b
___________________________
Ernst & Young LLP
SSA 700.40
SSA 700.42
SSA 700.41
27 February 2015
Commentary:
$000
2013
(Restated)
$000
Continuing operations
Revenue
136,720
142,571
Cost of sales
(104,271)
(111,820)
FRS 1.103
Gross profit
32,449
30,751
FRS 1.103
FRS 1.103
430
327
FRS 18.35.b.iii
526
406
FRS 18.35.b.v
1,511
886
(4,895)
(4,195)
(320)
(327)
FRS 1.103
FRS 1.103, FRS 38.126
(20,266)
(18,952)
FRS 1.103
Finance costs
(1,715)
(1,512)
FRS 1.82.b
Other expenses
(1,471)
(724)
FRS 1.103
128
FRS 1.82.c
151
657
328
7,057
7,116
10
(1,557)
(1,687)
5,500
5,429
FRS 1.82.c
FRS 1.85
FRS 1.82.d, FRS 12.77
FRS 1.85
Discontinued operation
Loss from discontinued operation, net of tax
11
(544)
(188)
4,956
5,241
FRS 1.81A.a
5,320
5,029
FRS 105.33.d
Attributable to:
Owners of the Company
Profit from continuing operations, net of tax
Loss from discontinued operation, net of tax
(544)
(188)
FRS 105.33.d
4,776
4,841
180
400
180
400
FRS 1.81B.i
FRS 1.81B.ii
Non-controlling interests
12(a)
22.98
21.81
Diluted
12(a)
22.73
21.58
Basic
12(b)
20.63
21.00
Diluted
12(b)
20.43
20.78
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
2014
$000
2013
(Restated)
$000
4,956
5,241
1,250
2,404
FRS 1.82.f
FRS 1.82A.b
62
10
1,312
2,414
274
110
FRS 107.20.a.ii
FRS 16.77.f
FRS 1.82A.a
(100)
(12)
FRS 107.20.a.ii
(181)
(82)
FRS 21.52.b
(7)
16
1,305
2,430
FRS 1.81A.b
6,261
7,671
FRS 1.81A.c
6,091
7,211
FRS 1.81B.b.ii
170
460
FRS 1.81B.b.i
6,261
7,671
Attributable to:
Owners of the Company
Non-controlling interests
Total comprehensive income for the year
Attributable to:
Owners of the Company
Total comprehensive income from continuing operations,
net of tax
Total comprehensive income from discontinued operation,
net of tax
Total comprehensive income for the year attributable to
owners of the Company
6,585
(494)
6,091
7,379
(168)
7,211
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
FRS 105.33.d
FRS 105.33.d
Commentary:
Complete set of financial statements
FRS 1.10
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
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 periods financial statements.
*** In such cases, a complete set of financial statements will include three statements of financial
position.
FRS 1.10
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
profit or loss and other comprehensive income in two sections or as two linked statements.
FRS 1.81A
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
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 entitys accounting system and management reporting system.
FRS 1.99
In this illustration, the format adopted is two linked statements with analysis of expenses by their
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.
FRS 1.104
Commentary (continued):
Reporting of continuing and discontinued operations
An entity shall re-present the disclosures required for discontinued operations for prior periods
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.
FRS 105.34
On disposal of the disposal group, the gain or loss from discontinued operation presented on the
statement of comprehensive income includes the gain or loss on disposal of the disposal group
constituting the discontinued operation.
FRS 105.33.b.iii
Additional line items, heading and subtotals should be presented on the face of the statement of
comprehensive income, when such presentation is relevant to the understanding of the entitys
financial performance.
FRS 1.85
FRS 1.IG6
Terminology used
Although FRS 1 uses the terms other comprehensive income, profit or loss and total
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.
FRS 1.8
Commentary (continued):
Tax effects related to each component of other comprehensive income
FRS 1.91
2013
$000
1,506
75
2,868
12
(269)
1,312
(466)
2,414
350
135
(120)
(181)
(15)
(82)
(56)
(7)
1,305
(22)
16
2,430
Either way, the amount of income tax relating to each component of other comprehensive income
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.
FRS 1.90
FRS 12.81.ab
Balance sheets
As at 31 December 2014
Balance sheets
Note
2014
$'000
Group
31 December
2013
(Restated)
$'000
Company
1 January
2013
(Restated)
$'000
2014
$'000
2013
$'000
Assets
Non-current assets
Property, plant and equipment
Investment properties
Intangible assets
Land use rights
Investment in subsidiaries
Investment in joint venture
Investment in associates
Deferred tax assets
Other receivables
Investment securities
Current assets
Gross amount due from customers for
contract work-in-progress
Development properties
Inventories
Prepaid operating expenses
Trade and other receivables
Investment securities
Derivatives
Cash and short-term deposits
Assets of disposal group classified as held for
sale
13
14
15
16
17
18
19
20
21
22
30,718
4,645
2,419
5,811
1,674
10,595
470
2,793
4,608
63,733
31,064
3,955
1,333
5,733
1,523
10,321
463
2,778
3,106
60,276
28,155
3,825
1,368
5,730
1,370
10,125
455
2,715
3,630
57,373
1,079
12,147
21
16,753
30,000
603
10,582
26
17,401
28,612
23
24
25
651
2,900
24,020
122
22,852
1,512
170
6,117
58,344
398
2,650
24,400
250
24,967
1,260
105
4,858
58,888
67
2,450
25,300
312
22,095
1,150
95
3,668
55,137
53
338
4,621
5,012
122
350
4,145
4,617
2,270
60,614
58,888
55,137
2,300
7,312
4,617
124,347
119,164
112,510
37,312
33,229
801
300
2,927
1,189
295
210
6,734
2,290
155
150
6,362
2,350
1,447
-
2,115
-
FRS 1.54.l
FRS 20.24
FRS 1.54.n
FRS 1.54.m
FRS 11.42.b
FRS 1.54.k
FRS 1.54.m
FRS 1.54.m
21
22
26
27
11
Total assets
FRS 1.54.a
FRS 1.54.b
FRS 1.54.c
FRS 1.55
FRS 1.55
FRS 1.54.e
FRS 1.54.e
FRS 1.54.o and 56
FRS 1.54.h
FRS 1.54.d
FRS 11.42.a
FRS 1.54.g
FRS 1.54.g
FRS 1.55
FRS 1.54.h
FRS 1.54.d
FRS 1.54.d
FRS 1.54.i
FRS 1.54.j,
FRS 105.38
23
31
32
26
358
17,367
3,659
22
26,623
586
18,934
2,579
31,628
942
18,367
3,067
31,393
470
1,166
3,083
414
446
2,975
11
2,071
28,694
31,628
31,393
3,083
2,975
31,920
27,260
23,744
4,229
1,642
1,525
3,488
2,273
13,415
200
20,901
1,841
1,754
1,904
13,188
18,687
1,898
954
1,517
14,290
18,659
226
5,750
5,976
231
5,628
5,859
Total liabilities
49,595
50,315
50,052
9,059
8,834
Net assets
74,752
68,849
62,458
28,253
24,395
33(a)
33(b)
11,090
(159)
54,657
7,058
9,665
51,627
5,657
9,510
48,477
3,031
11,090
(159)
16,700
622
9,665
14,309
421
FRS 1.54.r
FRS 1.54.r
FRS 1.54.r
FRS 1.54.r
11
66,949
1,900
68,849
61,018
1,440
62,458
28,253
28,253
24,395
24,395
FRS 105.38
Non-controlling interests
Total equity
128
72,774
1,978
74,752
124,347
119,164
112,510
37,312
33,229
28
29
30
28
29
20
30
31
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
FRS 1.54.p,
FRS 105.38
FRS 1.54.l
FRS 20.24
FRS 1.54.o and 56
FRS 1.54.m
FRS 1.54.k
FRS 1.54.q
Balance sheets
As at 31 December 2014
Commentary:
Complete set of financial statements
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.
An entity shall present current and non-current assets, and current and non-current liabilities, as
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.
FRS 1.60
2014
Group
Note
2.2
Equity,
total
Equity
attributable
to owners
of the
Company,
total
Share
capital
Treasury
shares
$000
$000
$000
$000
68,849
66,949
9,665
4,956
4,776
174
174
Retained
earnings
Other
reserves,
total
Fair value
adjustment
reserve
Asset
revaluation
reserve
Statutory
reserve
fund
Foreign
currency
translation
reserve
$000
$000
$000
$000
$000
$000
51,627
5,657
426
4,414
740
4,776
174
174
(344)
Premium
paid on
acquisition
of noncontrolling
interests
Employee
share
option
reserve
Gain or loss
on
reissuance
of treasury
shares
Equity
component of
convertible
redeemable
preference
shares
Reserve of
disposal
group
classified as
held for sale
Noncontrolling
interests
$000
$000
$000
$000
$000
$000
341
80
1,900
180
FRS 1.106A,FRS
1.106.d.ii,
FRS 1.82.g, FRS 16.77.f
FRS 1.106.d.i
1,250
(181)
1,250
(171)
1,250
(171)
1,250
(171)
(10)
62
62
62
62
1,305
1,315
1,315
174
1,312
(171)
(10)
6,261
6,091
4,776
1,315
174
1,312
(171)
170
FRS 1.106A,FRS
1.106.d.ii, FRS 1.82.g,
FRS 21.52.b
FRS 1.106A, FRS
1.106.d.ii, FRS 1.82.h,
FRS 28.39
FRS 1.106.a
2014
Group
Note
Equity,
total
Equity
attributable
to owners
of the
Company,
total
Share
capital
Treasury
shares
Retained
earnings
Other
reserves,
total
Fair value
adjustment
reserve
Asset
revaluation
reserve
Statutory
reserve
fund
Foreign
currency
translation
reserve
Premium
paid on
acquisition
of noncontrolling
interests
Employee
share
option
reserve
Gain or loss
on
reissuance
of treasury
shares
Equity
component of
convertible
redeemable
preference
shares
Reserve of
disposal
group
classified as
held for sale
Noncontrolling
interests
Contributions by and
distributions to owners
FRS 1.106.d.iii
33(a)
33(a)
1,475
(50)
1,475
(50)
1,475
(50)
35
245
245
33(b)
(254)
(254)
33(b)
43
81
81
FRS 1.106.d.iii
FRS 32.39
245
245
FRS 102.50
FRS 32.33
65
FRS 102.50,
FRS 32.33
(254)
95
-
(1,613)
(1,613)
(116)
(116)
1,425
(159)
(14)
(79)
(1,613)
FRS 1.106.d.iii
(1,613)
231
166
65
FRS 1.106.d.iii
558
FRS 1.106.d.iii
17
558
17
(800)
(150)
(150)
(150)
(650)
(242)
(150)
(150)
(150)
(92)
FRS 1.106.d.iii
(358)
(266)
1,425
(150)
166
65
(92)
FRS 1.106.d.iii
(159)
(1,613)
81
2014
Group
Note
Equity,
total
Equity
attributable
to owners
of the
Company,
total
Share
capital
Treasury
shares
Retained
earnings
Other
reserves,
total
Fair value
adjustment
reserve
Asset
revaluation
reserve
Statutory
reserve
fund
Foreign
currency
translation
reserve
Premium
paid on
acquisition
of noncontrolling
interests
Employee
share
option
reserve
Gain or loss
on
reissuance
of treasury
shares
Equity
component of
convertible
redeemable
preference
shares
Reserve of
disposal
group
classified as
held for sale
Noncontrolling
interests
Others
Reserve attributable to disposal
group classified as held for
sale
(128)
(128)
30
(30)
(163)
163
163
Total Others
(133)
(128)
163
74,752
72,774
54,657
7,058
600
5,598
903
11
11,090
(159)
(515)
(150)
(30)
(30)
477
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
128
FRS 105.38
FRS 102.50
FRS 1.106.d.iii
128
65
80
128
1,978
2013
Group
Note
2.2
Equity,
total
Equity
attributable
to owners of
the Company,
total
Share
capital
Retained
earnings
Other
reserves,
total
Fair value
adjustment
reserve
$000
$000
$000
$000
$000
$000
$000
62,458
61,018
9,510
48,477
3,031
328
2,000
613
5,241
4,841
4,841
Asset
revaluation
reserve
Statutory
reserve
fund
$000
Foreign
currency
translation
reserve
Employee
share
option
reserve
$000
$000
(202)
-
Equity
component of
convertible
redeemable
preference
shares
$000
Noncontrolling
interests
$000
292
1,440
400
FRS 1.106.d.i
98
2,404
(82)
98
2,404
(142)
98
2,404
(142)
98
2,404
10
10
10
10
2,430
2,370
2,370
98
2,414
7,671
7,211
4,841
2,370
98
2,414
(142)
60
(142)
60
(142)
460
FRS 1.106.a
2013
Group
Note
Equity,
total
Equity
attributable
to owners of
the Company,
total
Share
capital
Retained
earnings
Other
reserves,
total
Fair value
adjustment
reserve
$000
$000
$000
$000
$000
$000
Asset
revaluation
reserve
$000
Statutory
reserve
fund
$000
Foreign
currency
translation
reserve
Employee
share
option
reserve
$000
$000
Equity
component of
convertible
redeemable
preference
shares
$000
Noncontrolling
interests
$000
FRS 1.106.d.iii
35
33(a)
43
150
150
150
150
FRS 102.50
72
72
155
(83)
(83)
FRS 102.50
FRS 1.106.d.iii
(1,582)
80
(1,280)
(1,582)
80
(1,280)
155
(1,582)
(1,582)
80
80
FRS 32.28
147
67
80
FRS 1.106.d.iii
(18)
FRS 102.50
FRS 1.106.d.iii
80
1,900
Others
Expiry of employee share options
(18)
(127)
127
127
Total others
(109)
109
127
68,849
66,949
9,665
5,657
426
4,414
740
18
51,627
(344)
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
(18)
341
Retained earnings
Other reserves,
total
Employee share
option reserve
Gain or loss on
reissuance of
treasury shares
Equity component
of convertible
redeemable
preference shares
$'000
$'000
$'000
$'000
$'000
2014
Company
Note
Equity, total
Share capital
Treasury shares
$'000
$'000
$'000
24,395
9,665
14,309
421
341
80
3,974
3,974
1,475
1,475
FRS 1.106.d.iii
FRS 1.106.d.iii
33(a)
33(a)
35
33(b)
FRS 32.39
245
(50)
245
245
FRS 102.50
30
(30)
(30)
FRS 102.50
FRS 32.33
65
(254)
81
43
(50)
(254)
95
(14)
(79)
(1,613)
(1,613)
FRS 1.106.d.iii
(116)
1,425
(159)
(1,583)
201
136
65
FRS 1.106.d.iii
11,090
(159)
16,700
622
477
65
80
28,253
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
2013
Company
Note
Equity, total
Share capital
Treasury shares
Retained earnings
Other reserves,
total
$'000
$'000
$'000
$'000
$'000
23,226
9,510
2,449
Employee share
option reserve
Gain or loss on
reissuance of
treasury shares
Equity component
of convertible
redeemable
preference shares
$'000
$'000
$'000
13,424
292
292
2,449
FRS 1.106.d.iii
35
150
150
150
FRS 102.50
33(a)
72
155
(83)
(83)
FRS 102.50
18
(18)
(18)
FRS 102.50
80
(1,582)
(1,280)
155
24,395
9,665
43
80
80
(1,582)
FRS 1.106.d.iii
(1,564)
129
49
80
FRS 1.106.d.iii
14,309
421
341
80
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
FRS 32.28
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
each component of equity to be presented either in the statement of changes in equity or in the notes
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
Companys balance sheet may be presented in the notes to the financial statements instead.
FRS 1.106.d.ii
FRS 1.106A
2013
(Restated)
$'000
$'000
Note
FRS 7.18.b
Operating activities
Profit before tax from continuing operations
Loss before tax from discontinued operation
7,057
11
(551)
6,506
7,116
(193)
6,923
Adjustments for:
29
(239)
(180)
15
220
252
16
132
130
13
3,043
2,838
35
245
150
14
(489)
(129)
(135)
(95)
(43)
(56)
(120)
(15)
140
17
235
13
500
15
200
22
198
210
135
115
76
(120)
1,715
1,512
(526)
(406)
Interest income
(430)
(327)
11
450
Provisions
(144)
105
(151)
(128)
(657)
(328)
(240)
Total adjustments
Operating cash flows before changes in working capital
120
4,115
3,648
10,621
10,571
FRS 7.20.a
(250)
(200)
(253)
(331)
(228)
Decrease/(increase) in inventories
Decrease in trade and other receivables
Decrease in prepaid operating expenses
Decrease in trade and other payables
Increase/(decrease) in other liabilities
Total changes in working capital
Cash flows from operations
Interest received
FRS 7.28
942
2,245
128
(1,562)
(356)
(1,575)
904
62
(1,864)
630
(496)
1,662
(3,856)
12,283
6,715
430
327
FRS 7.31
Interest paid
(1,834)
(1,550)
(5,682)
(3,571)
FRS 7.35
5,197
1,741
FRS 7.10
FRS 7.31
Note
2014
2013
(Restated)
$'000
$'000
Investing activities
Net cash inflow on acquisition of a subsidiary
FRS 7.21
17
29
217
FRS 7.39
526
406
FRS 7.31
328
278
FRS 7.16.d
2,040
1,030
FRS 20.28
6,867
1,559
FRS 7.16.b
(2,025)
(588)
(4,358)
13
(8,640)
14
(500)
15
(200)
(200)
(1,387)
(1,873)
Financing activities
Acquisition of non-controlling interests
Dividends paid on ordinary shares
(800)
43
(1,613)
33(b)
33(b)
(1,582)
(254)
95
FRS 7.16.a
FRS 7.10
FRS 7.17.b
FRS 7.17.a
72
FRS 7.17.a
3,000
FRS 7.17.c
(50)
(132)
(1,305)
1,358
2,505
1,226
(50)
FRS 7.31
(135)
FRS 7.42A
4,259
(2,807)
FRS 7.16.a
FRS 7.16.a
FRS 7.21
17
FRS 7.16.c
FRS 7.17.d
FRS 7.17.e
FRS 7.10
35
FRS 7.28
3,414
2,153
FRS 7.45
5,869
3,414
FRS 7.45
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Commentary:
Presentation of consolidated cash flow statement using direct method
In this illustration, the consolidated cash flow statement is presented using indirect method whereby
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:
FRS 7.App A
Group
2014
$'000
FRS 7.18
2013
$'000
Operating activities
Receipts from customers
Payments to suppliers and employees
Cash generated from operations
Interest paid
Income taxes paid
Net cash flows from/(used in) operating activities
XXX
(XXX)
XXX
(XXX)
(XXX)
XXX
XXX
(XXX)
XXX
(XXX)
(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.
If there is such disposal, an entity should disclose:
(a)
(b)
(c)
(d)
FRS 7.40.a-d
An investment entity, as defined in FRS 110 Consolidated Financial Statements, need not apply (c)
and (d) above to an investment in subsidiary that is required to be measured at fair value through
profit or loss.
FRS 7.40A
FRS 7.40.b
The value of assets and liabilities of XXX Limited recorded in the consolidated financial
statements as at 30 November 2014, and the cash flow effect of the disposal were:
FRS 7.40.d
$000
XXX
XXX
XXX
XXX
XXX
(XXX)
(XXX)
FRS 7.40.c
XXX
XXX
(XXX)
XXX
Commentary (continued):
Contingent consideration for business combination
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
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.
FRS 7.28
Corporate information
XYZ Holdings (Singapore) Limited (the Company) is a limited liability company
incorporated and domiciled in Singapore and is listed on the Singapore Exchange. The
immediate and ultimate holding company is Good Group (International) Ltd.
The registered office and principal place of business of the Company is located at Level
18, One Raffles Quay, North Tower, 048583, Singapore.
FRS 1.138.a
The principal activity of the Company is investment holding. The principal activities of the
subsidiaries are disclosed in Note 17 to the financial statements.
FRS 1.138.b
Commentary:
Disclosures required by FRS 1.138
The following information may be provided in the notes to the financial statements or
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 entitys operations and its principal activities; and
If the entity changes its name during the financial year, the change shall be disclosed.
FRS 1.138
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].
Disclosures of name of the ultimate controlling party
2.
2.1
FRS 24 requires an entity to disclose the name of the entitys parent and, if different, the
ultimate controlling party. The ultimate controlling party can be either an entity or a person.
FRS 24.13
FRS 1.117
The financial statements have been prepared on the historical cost basis except as
disclosed in the accounting policies below.
FRS 1.117.a
The financial statements are presented in Singapore Dollars (SGD or $) and all values
in the tables are rounded to the nearest thousand ($000), except when otherwise
indicated.
2.
2.1
FRS 1.25
FRS 1.122
FRS 1.25
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 Companys 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 Companys 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.
Functional and presentation currency
When the presentation currency is different from the functional currency of the Company,
that fact shall be stated, together with disclosure of the functional currency and the
reasons for using a different presentation currency.
FRS 21.53
(214)
Administrative expenses
63
151
As at 1
January
2013
$000
(1,449)
(1,411)
1,523
1,370
74
41
(66)
(56)
(454)
(410)
Total assets
(446)
(425)
240
230
206
195
Total liabilities
446
425
FRS 8.28.b
FRS 8.28.d
FRS 111.C2
(10)
Investing
Financing
20
10
Commentary:
Alternative simplified disclosures
Following are illustrative disclosure when management concluded that the adoption of new
FRSs and INT FRSs does not have any impact on the financial statements.
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
statements.
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 Groups 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 Groups 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 investees 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, by applying the requirements of FRS 103
(issued 2004). The effects of adoption of the financial statements are as follows :
As at 1
January
2013
(Restated)
(Restated)
$000
$000
(XXX)
(XXX)
XXX
XXX
Investment properties
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
Provisions
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
Non-controlling interests
XXX
XXX
Others reserves
XXX
XXX
Impact on equity
XXX
XXX
(Decrease)/increase in:
Consolidated balance sheet
Investment in associate
XXX
Cost of sales
XXX
Interest income
XXX
Other income
XXX
XXX
Administrative expenses
XXX
(XXX)
Finance costs
XXX
XXX
XXX
Non-controlling interests
XXX
XXX
XXX
(XXX)
XXX
XXX
XXX
XXX
As at 1
January
2013
(Restated)
(Restated)
$000
$000
Increase/(decrease) in:
Consolidated balance sheet
Investment in associate
XXX
XXX
(XXX)
(XXX)
Investment property
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
Provisions
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
Cost of sales
(XXX)
Interest income
(XXX)
Other income
(XXX)
(XXX)
Administrative expenses
(XXX)
XXX
Finance costs
(XXX)
(XXX)
(XXX)
Non-controlling interests
(XXX)
(Decrease)/increase in:
Consolidated statement of comprehensive income
Net surplus on revaluation of freehold land and
buildings
(XXX)
(XXX)
XXX
(XXX)
(XXX)
(XXX)
(XXX)
In this illustration, the Group measures the assets and liabilities and non-controlling
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 investees 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.
FRS 110.C4.c.i
FRS 110 allows an entity to apply either FRS 103 (2008) or FRS 103 (issued in 2004). In
this illustration, the Group applied the requirements of FRS 103 (issued 2004).
Alternatively, the Group may apply FRS 103 (issued 2008).
FRS 110.C4B
In this illustration, the Group measures the retained interest in the investee, JJJ Ltd at the
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 Groups 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.
FRS 110.C5
1 July 2014
1 July 2014
1 July 2014
1 July 2014
1 July 2014
1 July 2014
1 July 2014
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:
Standards issued but not yet effective
FRS 8.30, 31
The following are IFRSs that have been issued by International Accounting Standards
Board (IASB) but have not been adopted as FRS in Singapore:
Amendments to IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets,
effective for annual periods beginning on or after 1 July 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 entitys financial statements in the
period of initial application.
2.4
Basis of consolidation
The consolidated financial statements comprise the financial statements of the
Company and its subsidiaries as at the end of the reporting period. The
financial statements of the subsidiaries used in the preparation of the
consolidated financial statements are prepared for the same reporting date as
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
resulting from intra-group transactions and dividends are eliminated in full.
Subsidiaries are consolidated from the date of acquisition, being the date on
which the Group obtains control, and continue to be consolidated until the date
that such control ceases.
b)
FRS 110.4
FRS
110.Appendix A
FRS 110.B92
FRS 110.19 and
B87
FRS 110.B86.c
FRS 110.B94
FRS 110.23
FRS 110.B98
FRS 103.4
FRS 103.10 and
18
FRS 103.53
FRS 103.39, 40
and 58
FRS 103.19
Any excess of the sum of the fair value of the consideration transferred in the
business combination, the amount of non-controlling interest in the acquiree
(if any), and the fair value of the Groups previously held equity interest in the
acquiree (if any), over the net fair value of the acquirees identifiable assets
and liabilities is recorded as goodwill. The accounting policy for goodwill is set
out in Note 2.9(a). In instances where the latter amount exceeds the former,
the excess is recognised as gain on bargain purchase in profit or loss on the
acquisition date.
FRS 103.32
FRS 103.B63.a
FRS 103.34
FRS 36.80
FRS 36.90
FRS 110 provides exception to the consolidation requirement for entities that meet the
The financial statements of the parent and its subsidiaries used in the preparation of the
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
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 parents 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.
FRS 110.B93
FRS 112.11
FRS 110.B92
The assets and liabilities of the combining entities are reflected at their carrying
amounts reported in the consolidated financial statements of the controlling
holding company.
No adjustments are made to reflect the fair values on the date of combination,
or recognise any new assets or liabilities.
No additional goodwill is recognised as a result of the combination.
Any difference between the consideration paid/transferred and the equity
acquired is reflected within the equity as merger reserve.
The statement of comprehensive income reflects the results of the combining
entities for the full year, irrespective of when the combination took place.
Comparatives are restated to reflect the combination as if it had occurred from the
beginning of the earliest period presented in the financial statements or from the date
the entities had come under common control, if later.
FRS 103.42
The amount that would be recognised in accordance with the accounting policy for
provisions set out in Note 2.21; or
FRS 103.56
FRS 103 provides acquirers with the option of measuring non-controlling interest arising
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
FRS 103.19
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 noncontrolling 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
FRS 36 Impairment of Assets permits annual impairment test for goodwill and intangible
assets with indefinite useful lives to be performed at any time during the year provided it
is at the same time each year. Different goodwill and intangible assets may be tested at
different times.
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
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.
FRS 36.86
2.6
FRS 110.Appendix
A
FRS 110.22
FRS 110.23
FRS 110.B96
Foreign currency
The financial statements are presented in Singapore Dollars, which is also the
Companys 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)
b)
FRS 1.51.d
FRS 21.21
FRS 21.28
FRS 21.23
FRS 21.39
FRS 21.48
Commentary:
Partial disposal of foreign operation
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
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.
FRS 21.48C
In this illustration, the Group does not have exchange differences arising from
monetary items that form part of the Groups net investment in foreign
operation.
Illustrative accounting policy for exchange differences arising from monetary
items that form part of the Groups net investment in foreign operation.
Exchange differences arising on monetary items that for part of the Groups
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.
2.7
FRS 16.39
FRS 16.40
FRS 16.35.b
FRS 16.41
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
assets as follows:
-
Buildings: 40 years
Plant and equipment: 3 to 15 years
Furniture and fixtures: 5 to 20 years
FRS 36.9
FRS 16.51
FRS 16.61
FRS 16.67
FRS 16.68
Commentary:
Revaluation of property, plant and equipment
2.8
When an item of property, plant and equipment is revalued, any accumulated depreciation
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.
Alternatively, the entity may adopt a policy to make an annual transfer of the revaluation
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 assets original cost.
FRS 16.35.a
FRS 16.41
Investment properties
Investment properties are properties that are either owned by the Group or leased
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
or developed for future use as investment properties. Properties held under operating
leases are classified as investment properties when the definition of an investment
property is met.
FRS 40.5
FRS 40.20
FRS 40.33
Investment properties are derecognised when either they have been disposed of or
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
disposal of an investment property are recognised in profit or loss in the year of
retirement or disposal.
FRS 40.8.e
FRS 40.6
FRS 40.35
FRS 40.66
FRS 40.69
Alternatively, the entity may adopt the cost model which is to measure investment
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
an operating lease as investment property.
In addition, for any investment properties recorded at cost, FRS 40 requires disclosure
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:
FRS 40.79.e
FRS 40.34
FRS 40.61
2.
2.9
FRS 38.24
FRS 38.33
FRS 38.74
FRS 38.88
Intangible assets with finite useful lives are amortised over the estimated useful lives
and assessed for impairment whenever there is an indication that the intangible asset
may be impaired. The amortisation period and the amortisation method are reviewed at
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
impairment annually , or more frequently if the events and circumstances indicate
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
asset with an indefinite useful life is reviewed annually to determine whether the useful
life assessment continues to be supportable. If not, the change in useful life from
indefinite to finite is made on a prospective basis.
FRS 36.10.a
Gains or losses arising from de-recognition of an intangible asset are measured as the
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.
FRS 38.113
a)
FRS 36.9
FRS 38.107
FRS 38.109
Brands
The brands were acquired in business combinations. The useful lives of the
brands are estimated to be indefinite because based on the current market
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)
FRS 38.104
FRS 38.118.a
FRS 38.122.a
FRS 38.54
FRS 38.57
c)
FRS 38.74
Club membership
Club membership was acquired separately and is amortised on a straight line
basis over its finite useful life of 10 years.
Commentary:
Intangible assets
2.10
Alternatively, the entity may adopt the revaluation model which is to measure intangible
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.
Please refer to commentary no.6 of Note 2.4(b) Business combinations and goodwill.
FRS 38.75
Commentary:
Land use rights
Long-term land-use rights are leases under the definition of FRS 17. In this illustration, it
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.
FRS 17.8
2.12
FRS 36.9
Impairment losses of continuing operations are recognised in profit or loss, except for
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.
FRS 36.60
A previously recognised impairment loss is reversed only if there has been a change in
the estimates used to determine the assets 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
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
increase.
FRS 36.114
FRS 36.59
FRS 36.117
FRS 36.119
Subsidiaries
A subsidiary is an investee that is controlled by the Group. The Group controls an
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 Companys separate financial statements, investments in subsidiaries are
accounted for at cost less impairment losses.
FRS 110.6
FRS 27.17.c
Commentary:
Subsidiaries
Alternatively, the entity may choose to account for its investment in subsidiary in
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.
FRS 27.10.b
FRS 111.4
FRS 111.7
FRS 111.14
FRS 111.15
FRS 111.16
Joint operations
The Group recognises in relation to its interest in a joint operation,
FRS 111.20
(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
interest in a joint operation in accordance with the accounting policies applicable to
the particular assets, liabilities, revenues and expenses.
FRS 111.21
b) Joint ventures
The Group recognises its interest in a joint venture as an investment and accounts
for the investment using the equity method. The accounting policy for investment
in joint venture is set out in Note 2.14.
FRS 112.21.b.i
Commentary:
Sales and contributions of assets to a joint operation
In this illustration, sales and contributions of assets to a joint operation are not significant.
Illustrative accounting policy for sales and contributions of assets to a joint operation
When the Group enters into transaction involving a sale or contribution of assets with
a joint operation in which it is a joint operator, the Group recognises gains or losses
resulting from such a transaction only to the extent of the interests held by the other
parties of the joint operation.
FRS 111.B34
In this illustration, purchases of assets from a joint operation are not significant.
Illustrative accounting policy for purchases of assets from a joint operation
When the Group enters into a transaction involving purchase of assets with a joint
operation in which it is a joint operator, the Group does not recognise its share of the
gains and losses until it resells those assets to a third party. When such transactions
provide evidence of a reduction in the net realisable value of the assets to be
purchased or of an impairment loss of those assets, the Group recognises it share of
those losses.
FRS 111.B36
FRS 111.B37
FRS 28.3
The Group account for its investments in associates and joint ventures using the equity
method from the date on which it becomes an associate or joint venture.
FRS 28.16
FRS 28.32
On acquisition of the investment, any excess of the cost of the investment over the
Groups share of the net fair value of the investees identifiable assets and liabilities is
accounted as goodwill and is included in the carrying amount of the investment. Any
excess of the Groups share of the net fair value of the investees identifiable assets
and liabilities over the cost of the investment is included as income in the
determination of the entitys share of the associate or joint ventures profit or loss in
the period in which the investment is acquired.
FRS 28.32
Under the equity method, the investment in associates or joint ventures are carried in
the balance sheet at cost plus post-acquisition changes in the Groups 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
and associate or joint venture are eliminated to the extent of the interest in the
associates or joint ventures.
FRS 28.10
When the Groups share of losses in an associate or joint venture equals or exceeds its
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.
FRS 28.38
After application of the equity method, the Group determines whether it is necessary to
recognise an additional impairment loss on the Groups investment in associate or joint
ventures. The Group determines at the end of each reporting period whether there is
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.
FRS 28.40
The financial statements of the associates and joint ventures are prepared as the same
reporting date as the Company. Where necessary, adjustments are made to bring the
accounting policies in line with those of the Group.
FRS 28.28
FRS 28.42
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,
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.
FRS 28.22
FRS 28.25
The interest in an associate or a joint venture is the carrying amount of the investment in
the associate or joint venture under the equity method together with any long-term
interests that, in substance, form part of the investors 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 entitys 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.
The financial statements of the associate or joint venture are prepared as of the same
reporting date as the Company unless it is impracticable to do so. When the financial
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
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.
FRS 28.38
FRS 28.33
FRS 28.34
FRS 112.22.b
FRS 107.21
Financial assets
Initial recognition and measurement
Financial assets are recognised when, and only when, the Group becomes a
party to the contractual provisions of the financial instrument. The Group
determines the classification of its financial assets at initial recognition.
When financial assets are recognised initially, they are measured at fair value,
plus, in the case of financial assets not at fair value through profit or loss,
directly attributable transaction costs.
FRS 39.14
FRS 39.43
Subsequent measurement
The subsequent measurement of financial assets depends on their
classification as follows:
i)
ii)
FRS 39.9
FRS 39.46.a
FRS 39.56
FRS 107.AGB5.e
FRS 107.AGB5.b
FRS 39.9
FRS 39.46
FRS 39.55.b
FRS 107.AGB5.e
FRS 39.46.c
De-recognition
A financial asset is derecognised where the contractual right to receive cash
flows from the asset has expired. On de-recognition of a financial asset in
its entirety, the difference between the carrying amount and the sum of the
consideration received and any cumulative gain or loss that had been
recognised in other comprehensive income is recognised in profit or loss.
FRS 39.17.a
FRS 39.26
Financial liabilities
Initial recognition and measurement
Financial liabilities are recognised when, and only when, the Group becomes a
party to the contractual provisions of the financial instrument. The Group
determines the classification of its financial liabilities at initial recognition.
FRS 39.14
All financial liabilities are recognised initially at fair value plus in the case of
financial liabilities not at fair value through profit or loss, directly attributable
transaction costs.
FRS 39.43
Subsequent measurement
After initial recognition, financial liabilities that are not carried at fair value
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.
FRS 39.56
FRS 107.B5.e
De-recognition
A financial liability is de-recognised when the obligation under the liability is
discharged or cancelled or expires. When an existing financial liability is
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.
FRS 39.39
FRS 39.40 and 41
Commentary:
Transfers between fair value hierarchy
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.
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.
FRS 113.95
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
on the trade date i.e. the date that the Group commits to purchase or sell the asset.
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.
FRS 39.9
FRS 39.38
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
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
trading. 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.
FRS 39.9
Subsequent to initial recognition, financial assets at fair value through profit or loss
are measured at fair value. Any gains or losses arising from changes in fair value of the
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.
FRS 39.46
FRS 39.55.a
FRS 107.AGB5.e
Derivatives embedded in host contracts are accounted for as separate derivatives and
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
significantly modifies the cash flows that would otherwise be required.
FRS 39.11
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
for trading. 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.
FRS 39.9
FRS 39.47.a
Subsequent to initial recognition, financial liabilities at fair value through profit or loss
are measured at fair value. Any gains or losses arising from changes in fair value of the
financial liabilities are recognised in profit or loss.
FRS 39.47
FRS 39.55.b
FRS 107.B5.e
FRS 39.9
FRS 39.46.b
FRS 39.56
FRS 107.AGB5.e
Financial assets or financial liabilities designated as at fair value through profit or loss
FRS 107.AGB5.a
The nature of the financial assets or financial liabilities the entity has designated as
at fair value through profit or loss;
The criteria for so designating such financial assets or financial liabilities on initial
recognition; and
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 entitys documented risk management or investment strategy.
Net gain or loss on financial assets at fair value through profit or loss
FRS 107.AGB5.e
The Group transfers the contractual rights to receive the cash flows of the
financial asset; or
FRS 39.18.a
(b)
The Group retains the contractual rights to receive the cash flows of the financial
asset, but assumes a contractual obligation to pay the cash flows to one or more
recipients in a past-through arrangement; or
(c)
The Group has transferred its rights to receive cash flows from the asset and
either has transferred substantially all the risks and rewards of the asset, or has
neither transferred nor retained substantially all the risks and rewards of the
asset, but has transferred control of the asset.
FRS 39.20
Where the Group has transferred its rights to receive cash flows from an asset and has
neither transferred nor retained substantially all the risks and rewards of the asset nor
transferred control of the asset, the asset is recognised to the extent of the Groups
continuing involvement in the asset. Continuing involvement that takes the form of a
guarantee over the transferred asset, is measured at the lower of the original carrying
amount of the asset and the maximum amount of consideration that the Group could
be required to repay.
Where continuing involvement takes the form of a written and/or purchased option on
the transferred asset, the extent of the Groups continuing involvement is the amount
of the transferred asset that the group may repurchase, except that in the case of a
written put option on an asset measured at fair value, the extent of the Groups
continuing involvement is limited to the lower of the fair value of the transferred asset
and the option exercise price.
If the Group have transfers of financial assets that are not derecognised in their entirety
or transfers of financial assets that are derecognised in their entirety but retains
continuing involvement, please refer to disclosure requirements of paragraphs 42A to
42H and AGB 29 to AGB 39 of FRS 107.
FRS 39.20.c.ii
FRS 39.30.a
FRS 107.42A
42H
FRS 107.AGB 29
AGB 39
FRS 107.21
The Group assesses at each reporting date whether there is any objective evidence that
a financial asset is impaired.
FRS 39.58
a)
b)
FRS 39.64
FRS 39.63
FRS 39.AG84
FRS 107.AGB5.d
FRS 107.AGB5.f
FRS 39.65
FRS 39.66
FRS 107.AGB5.f
FRS 39.69
FRS 39.AG93
FRS 39.70
Commentary:
Financial assets that are the subject of renegotiated terms
When the terms of financial assets that would otherwise be past due or impaired have
been renegotiated, the entity shall disclose the accounting policy for financial assets that
are the subject of renegotiated terms.
FRS 107.AGB5.g
When there is an impairment loss, the carrying amount of the asset may be reduced either
directly or through the use of an allowance account.
FRS 39.63
2.18
FRS 7.46
FRS 7.6
FRS 7.8
Construction contracts
The Group principally operates fixed price contracts. Contract revenue and contract
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.
FRS 11.22
FRS 11.25
FRS 11.32
FRS 11.36
FRS 11.22
FRS 11.32
FRS 11.30.a
Commentary:
Stage of completion
2.19
The stage of completion of a contract may be determined in a variety of ways. The entity
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.
FRS 11.9
Development properties
Development properties are properties acquired or being constructed for sale in the
ordinary course of business, rather than to be held for the Groups own use, rental or
capital appreciation.
Development properties are held as inventories and are measured at the lower of cost
and net realisable value.
FRS 2.9
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.
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
bringing the inventories to their present location and condition are accounted for as
follows:
FRS 2.25
Finished goods and work-in-progress: costs of direct materials and labour and a
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,
less estimated costs of completion and the estimated costs necessary to make the sale.
Commentary:
Cost formulas
Alternatively, the costs may be assigned by using the weighted average cost formula. An
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.
FRS 2.25
FRS 37.14
FRS 37.59
FRS 37.45-47
FRS 37.60
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:
In this illustration, the Group does not have any decommissioning liability or restructuring
provision.
Provision for de-commissioning costs
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
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
estimated cash flows and are recognised as part of the cost of that particular asset.
The cash flows are discounted at a current pre-tax rate that reflects the risks specific
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
of decommissioning are reviewed annually and adjusted as appropriate. Changes in
the estimated future costs or in the discount rate applied are added to or deducted
from the cost of the asset.
FRS 16.16.c
FRS 37.45
FRS 37.47
INT FRS 101.8
FRS 37.59
INT FRS 101.5
Restructuring provision
Illustrative accounting policy for restructuring provisions:
Restructuring provisions are only recognised when general recognition criteria for
provisions are fulfilled. Additionally, the Group needs to follow a detailed formal
plan about the business or part of the business concerned, the location and number
of employees affected, a detailed estimate of the associated costs and appropriate
time-line. The people affected have a valid expectation that the restructuring is
being carried out or the implementation has been initiated already.
FRS 37.71
FRS 37.72
2.
2.22
FRS 20.39.a
FRS 20.7
FRS 20.23 and 24
FRS 20.10A
Commentary:
Government grants related to an asset
FRS 20.24
In this illustration, it is assumed that the Group did not receive non-monetary government
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 20.23
2.23
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
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 20.12
FRS 20.29
Financial guarantee
FRS 107.21
A financial guarantee contract is a contract that requires the issuer to make specified
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.
FRS 39.9
Financial guarantees are recognised initially as a liability at fair value, adjusted for
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
higher than the amount initially recognised less amortisation, the liability is recorded at
the higher amount with the difference charged to profit or loss.
FRS 39.43
FRS 39.47.c
2.25
FRS 23.8
FRS 23.17
FRS 23.22
FRS 23.8
FRS 23.5
FRS 107.21
FRS 32.28
FRS 32.32
FRS 32.31
FRS 32.38
Commentary:
Convertible instruments with embedded derivative
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
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.
FRS 39.AG28
b)
FRS 19.51
FRS 102.16
FRS 102.21A
FRS 102.10
FRS 102.19-21
Commentary:
Employee leave entitlement
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):
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
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.
FRS 19.13
FRS 19.155
FRS 19.156
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
of an employees employment as a result of either an entitys decision to terminate an
employees employment before the normal retirement date or an employees decision
to accept an offer of benefits in exchange for the termination of employment.
FRS 19.8
A liability and expense for a termination benefits is recognised at the earlier of when
the entity can no longer withdraw the offer of those benefits and when the entity
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.
FRS 19.165
FRS 19.169
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.
Where the employee share option plan is cancelled, it is treated as if it vested on the
date of cancellation, and any expense that otherwise would have been recognised for
services received over the remaining vesting period is recognised immediately. This
includes any award where non-vesting conditions within the control of either the entity
or the employee are not met. However, if a new award is substituted for the cancelled
award, and designated as a replacement award on the date that it is granted, the
cancelled and new awards are treated as if they were a modification of the original
award, as described in the previous paragraph. All cancellations of equity-settled
transaction awards are treated equally.
FRS 102.28
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
fair value at the grant date. This fair value is recognised in profit or loss over the
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.
FRS 102.30
FRS 102.32
FRS 102.33
In situations where equity instruments are issued and some or all of the goods or services
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.
FRS 102.13A
Vesting condition are conditions that determine whether the entity receives the services
that entitle the counterparty to receive cash, other assets or equity instruments of the
entity under a share-based payment arrangement.
FRS 102.App A
FRS 102.App A
Any condition that is neither a service condition nor a performance condition would be
regarded as a non-vesting condition. Examples of non-vesting conditions are:
-
An agreement not to work for a competitor after the award has vested
Non-vesting conditions are to be taken into account when estimating the fair value of the
equity instruments granted.
Transfer of share option reserve
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.
FRS 102.21
As lessee
Finance leases which transfer to the Group substantially all the risks and
rewards incidental to ownership of the leased item, are capitalised at the
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
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
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
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)
FRS 17.20
FRS 17.25
FRS 17.27
FRS 17.33
INT FRS 15.5
As lessor
Leases where the Group retains substantially all the risks and rewards of
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.
2.28
FRS 17.8
FRS 17.8
FRS 17.52
FRS 105.15
Property, plant and equipment and intangible assets once classified as held for sale are
not depreciated or amortised.
FRS 105.25
FRS 105.6
FRS 105.32
a)
Sale of goods
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)
FRS 18.14
Rendering of services
Revenue from the installation of fire prevention equipment is recognised by
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
contract outcome cannot be measured reliably, revenue is recognised to the
extent of the expenses recognised that are recoverable.
c)
FRS 18.20
FRS 18.26
Rental income
Rental income arising from operating leases on investment properties is
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.
FRS 17.50
INT FRS 15.5
Commentary:
Revenue
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 Groups right to receive payment is
established.
FRS 18.30.c
b)
FRS 12.46
Current income taxes are recognised in profit or loss except to the extent that
the tax relates to items recognised outside profit or loss, either in other
comprehensive income or directly in equity. Management periodically
evaluates positions taken in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation and establishes
provisions where appropriate.
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
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
Deferred tax assets are recognised for all deductible temporary differences,
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 12.22.c
FRS 12.39
FRS 12.34
FRS 12.24
FRS 12.44
c)
FRS 12.56
Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply in the year when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the end of each reporting period.
FRS 12.47
FRS 12.37
Sales tax
Revenues, expenses and assets are recognised net of the amount of sales tax
except:
-
Receivables and payables that are stated with the amount of sales tax
included.
FRS 18.8
2.32
Treasury shares
The Groups own equity instruments, which are reacquired (treasury shares) are
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 Groups 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
FRS 32.37
FRS 32.33
Contingencies
A contingent liability is:
a)
a possible obligation that arises from past events and whose existence will be
confirmed only by the occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the Group; or
b)
a present obligation that arises from past events but is not recognised because:
(i)
(ii)
FRS 37.10
A contingent asset is a possible asset that arises from past events and whose existence
will be confirmed only by the occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the Group.
Contingent liabilities and assets are not recognised on the balance sheet of the Group,
except for contingent liabilities assumed in a business combination that are present
obligations and which the fair values can be reliably determined.
Commentary:
Alternative simplified disclosures
Following are illustrative disclosure when management concluded that there are no significant
judgements made in applying accounting policies and no estimation uncertainty that have a
significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial period.
The preparation of the Groups consolidated financial statements requires management to
make judgements, estimates and assumptions that affect the reported amounts of the
revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the
end of reporting period. Uncertainty about these assumptions and estimates could result in
outcomes that could require a material adjustment to the carrying amount of the asset or
liability affected in the future periods. Management is of the opinion that there is no
significant judgement made in applying accounting policies and no estimation uncertainty
that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial period.
3.1
a)
FRS 1.122
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:
Determination of lease classification
The Group has entered into commercial property leases on its investment properties.
The Group evaluated the terms and conditions of the arrangements and assessed that
the lease term does not constitute a substantial portion of the economic life of the
commercial property and the minimum lease payment is not substantially all of the fair
value of the leased asset. The Group determined that it retains all the significant risks
and rewards of ownership of these properties and so accounts for the contracts as
operating leases.
Determination of functional currency
The Group measures foreign currency transactions in the respective functional
currencies of the Company and its subsidiaries. In determining the functional
currencies of the entities in the Group, judgement is required to determine the
currency that mainly influences sales prices for goods and services and of the country
whose competitive forces and regulations mainly determines the sales prices of its
goods and services. The functional currencies of the entities in the Group are
determined based on managements assessment of the economic environment in
which the entities operate and the entities process of determining sales prices.
Management has assessed that prices are mainly denominated and settled in the
respective local currency of the entities of the Group. In addition, most of the entities
cost base is mainly denominated in their respective local currency. Therefore,
management concluded that the functional currency of the entities of the Group is
their respective local currency.
Consolidation of structured entities
In February 2013, the Group and a third party partner formed an entity to acquire
land and construct and operate a fire equipment safety facility. The Group holds a
20% equity interest in this entity. However, the Group has majority representation on
the entitys board of directors and is required to approve all major operational
decisions. The operations, once they commence, will be solely used by the Group.
Based on these facts and circumstances, management concluded that the Group
controls this entity and, therefore, consolidates the entity in its financial statements.
Additionally, the Group is effectively guaranteeing the returns to the third party. The
shares of the third party partner are recorded as a long term loan and return on
investment is recorded as interest expense.
FRS 1.125
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.
a)
b)
c)
FRS 1.125
Commentary:
Key sources of estimation uncertainty
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:
Deferred tax assets
Deferred tax assets are recognised for all unused tax losses to the extent that it is
probable that taxable profit will be available against which the losses can be utilised.
Significant management judgement is required to determine the amount of deferred
tax assets that can be recognised, based upon the timing and level of future taxable
profits together with future tax planning strategies. In determining the timing and
level of future taxable profits together with future tax planning strategies, the Group
assessed the probability of expected future cash inflows based on expected revenues
from existing orders and contracts for the next 10 years.
Where taxable profits are expected in the foreseeable future, deferred tax assets are
recognised on the unused tax losses. The carrying value of recognised tax losses at
31 December 2014 was $XXX (2013: $XXX) and the unrecognised tax losses at 31
December 2014 was $XXX (2013: $XXX).
If the Group was able to recognise all unrecognised deferred tax assets, profit would
increase by $XXX (2013:$XXX).
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.
Provision for decommissioning
As part of the identification and measurement of assets and liabilities for the
acquisition of XXX Limited in 2014, the Group has recognised a provision for
decommissioning obligations associated with a factory owned by XXX Limited. In
determining the fair value of the provision, assumptions and estimates are made in
relation to discount rates, the expected cost to dismantle and remove plant from the
site and the expected timing of those costs. The carrying amount of the provision as
at 31 December was $XXX (2013: $XXX). If the estimated pre-tax discount rate
used in the calculation had been XX% higher than managements estimate, the
carrying amount of the provision would have been $XXX (2013: $XXX) lower.
3.
3.2
Revenue
Group
Sale of goods
Construction revenue
5.
2014
2013
$000
$000
105,827
104,455
30,893
38,116
136,720
142,571
FRS 18.35.b.i
FRS 11.39.a
Interest income
Group
2014
2013
$000
$000
355
255
FRS 107.20.a.iv
48
47
FRS 107.20.a.ii
- Held-to-maturity investment
27
25
FRS 107.20.a.iii
430
327
FRS 107.20.a.b
Included in interest income from loans and receivables is interest of $98,000 (2013:
$92,000) from an impaired loan to a fellow subsidiary (Note 21).
6.
FRS 107.20.d
Other income
Group
2014
2013
$000
$000
239
180
FRS 20.39
345
291
FRS 40.75.f.i
Net gain from fair value adjustment of investment properties (Note 14)
489
129
FRS 40.76.d
120
FRS 1.98.c
135
95
FRS 107.20.a.i
43
56
FRS 107.20.a.i
120
15
FRS 107.20.a.ii
140
1,511
886
FRS 103.B64.p.ii
Finance costs
Group
2014
2013
$000
$000
1,640
1,506
75
30
62
59
1,777
1,595
30
10
(57)
(60)
FRS 23.26.a
(35)
(33)
FRS 23.26.a
FRS 107.20.a.v
FRS 107.20.a.v
FRS 107.20.b
8.
1,715
1,512
Other expenses
2014
2013
$000
$000
76
FRS 1.98.c
500
FRS 1.98.a
72
65
235
136
145
FRS 40.75.f.ii
FRS 1.97
FRS 21.52.a
FRS 107.20.e
135
115
100
FRS 107.20.e
FRS 107.20.e
FRS 24.18.d
198
210
FRS 107.20.e
Group
Audit fees:
- Auditors of the Company
- Other auditors
2014
2013
$000
$000
400
400
50
50
250
250
Non-audit fees:
- Auditors of the Company
- Other auditors
SGX 1207.6a
SGX 1207.6a
30
30
3,043
2,838
FRS 1.104
220
252
FRS 1.104
300
20,502
19,024
FRS 1.104
80,567
82,122
FRS 2.36.d
484
387
Utility charges
1,428
1,486
Transportation charges
2,450
2,584
325
228
FRS 1.97
FRS 17.35.c
Commentary:
Separate disclosure of income and expenses
FRS 107.20.b only requires total income (calculated using the effective interest method) for
financial assets that are not at fair value through profit or loss to be disclosed.
FRS 107.20.b
FRS 1.97
When items of income and expense are material, their nature and amount should be disclosed
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.
An entity shall disclose the fee income and expense (other than amounts included in
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.
FRS 107.20.c
Impairment losses;
FRS 107.20.e
FRS 107.16
Credit risk;
FRS 107.36
FRS 107.25
Accounting policy for recognising any difference between fair value at initial
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
FRS 107.28
FRS 107.42D
FRS 107 requires an entity to group financial instruments into classes that are
appropriate to the nature of information disclosed and that take into account the
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.
FRS 107.6
FRS 107.B2
Treat as a separate class or classes those financial instruments outside the scope of
FRS 107
These expense items have been disclosed separately as they are considered to be material in
the assumed scenario due to their size or nature.
FRS 107.B1
FRS 107.6
FRS 1.97
Reclassification adjustments
In this illustration, the entity has chosen to disclose the reclassification adjustments and
current year gain or loss in the notes. An entity may choose to present this information in the
statement of comprehensive income itself.
FRS 1.94
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
amounts must be separately disclosed. For example, when an available-for-sale financial asset
is sold, accumulated amounts previously recognised in fair value adjustment reserve will be
reclassified into profit or loss for the period.
FRS 1.7
FRS 1.92
FRS 1.93
2013
$000
$000
1,422
1,344
FRS12.80.a
91
FRS 12.80.b
(50)
1,372
1,435
191
260
(6)
185
252
1,557
1,687
(7)
(5)
1,550
FRS 12.80.c
(8)
FRS 12.80.f
FRS 12.80.h
1,682
Company
2014
2013
2014
2013
$000
$000
$000
$000
FRS 12.81.ab
56
26
256
460
13
325
488
16
16
FRS 16.42
FRS 12.81.a
2014
2013
$000
$000
7,057
7,116
(551)
(193)
6,506
6,923
Tax at the domestic rates applicable to profits in the countries where the
Group operates
1,322
1,571
Adjustments:
Non-deductible expenses
Income not subject to taxation
Effect of partial tax exemption and tax relief
Deductions on treasury shares issued pursuant to employee share option
plan
Deferred tax on convertible redeemable preference shares
560
473
(170)
(388)
(35)
(20)
(3)
(4)
(3)
(6)
(8)
46
21
(50)
(112)
91
(56)
1,550
1,682
FRS 12.81.c.i
Alternatively, an entity may present a numerical reconciliation between the average effective
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
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
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
$000
2013
$000
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
FRS 12.85
1,016
Inventories
190
814
250
2,270
Liabilities:
Trade and other payables
(1,043)
(28)
(1,000)
Liabilities directly associated with disposal group classified as held for sale
Net liabilities directly associated with disposal group classified as held for sale
(2,071)
199
Reserve:
Asset revaluation reserve
128
FRS 105.33.b
Group
2014
2013
$000
$000
Revenue
13,152
14,598
FRS 105.33.b.i
Expenses
(12,983)
(14,708)
FRS 105.33.b.i
169
Finance costs
(70)
(110)
(83)
(200)
(450)
(551)
(193)
Taxation:
- Related to loss from ordinary activities of the discontinued operation
(544)
FRS 105.33.b.iii
and 41.c
FRS 105.33.b.i
FRS 105.33.b.ii
FRS 12.81.h.ii
FRS 105.33.b.iii
FRS 12.81.h.i
(188)
FRS 105.33.c
Operating
2014
2013
$000
$000
(1,025)
483
Investing
268
(189)
Financing
(137)
(114)
(894)
180
2013
$000
$000
(2.35)
(0.82)
FRS 33.68
Diluted
(2.30)
(0.80)
FRS 33.68
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).
Commentary:
FRS 5.5B clarifies that disclosure requirements in other FRSs do not apply to non-current
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
not within the scope of the measurement requirements of FRS 105, but within the disposal
group.
FRS 105.5B
FRS 105.5B.b
These analysis/disclosures are not required for disposal groups that are newly acquired
subsidiaries that meet the criteria to be classified as held for sale on acquisition.
FRS 105.33.b
An entity should re-present the disclosures in FRS 105.33 for prior periods presented in the
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.
FRS 105.34
In this illustration, loss per share from discontinued operations has been presented in the note.
Alternatively, this information may be presented on the face of the statement of
comprehensive income.
FRS 33.68
Diluted earnings per share from continuing operations are calculated by dividing profit
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:
2014
2013
$000
$000
4,776
4,841
544
188
5,320
5,029
62
59
5,382
5,088
No. of
shares
000
No. of
shares
000
23,150
23,055
18
15
505
505
23,673
23,575
Effects of dilution :
FRS 33.70.a
FRS 33.12
FRS 33.70.b
FRS 33.70.b
- Share options
- Convertible redeemable preference shares
Weighted average number of ordinary shares for diluted earnings per
share computation *
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
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
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.
FRS 33.70.c
FRS 33.70.d
In this illustration, it is assumed that the discontinued operation is not attributable to noncontrolling interests.
The objective of diluted earnings per share is consistent with that of basic earnings per share
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:
FRS 33.64
FRS 33.32
(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.
Potential ordinary shares shall be treated as dilutive only when their conversion to ordinary
shares would decrease earnings per share or increase loss per share from continuing
operations.
FRS 33.41
An entity shall disclose a description of ordinary share transactions or potential ordinary share
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.
FRS 33.70.d
FRS 33.71
An issue of shares when the proceeds are used to repay debt or preference shares
outstanding at the end of the reporting period;
The conversion or exercise of potential ordinary shares outstanding at the end of the
reporting period into ordinary shares;
The achievement of conditions that would result in the issue of contingently issuable
shares.
Earnings per share amounts are not adjusted for such transactions occurring after the end of
the reporting period because such transactions do not affect the amount of capital used to
produce profit or loss for the period.
Group
Cost or valuation:
At 1 January 2013
Additions
Disposals
Revaluation surplus
Elimination of accumulated depreciation on
revaluation
Exchange differences
At 31 December 2013 and 1 January 2014
Additions
Transfer from investment properties (Note 14)
Disposals
Acquisition of a subsidiary (Note 17)
Attributable to discontinued operation
(Note 11)
Revaluation surplus
Elimination of accumulated depreciation on
revaluation
Exchange differences
At 31 December 2014
Freehold
land
$000
Buildings
Plant and
equipment
Furniture
and
fixtures
Total
$000
$000
$000
$000
At valuation
At cost
FRS 16.73.a
7,468
1,075
25,079
2,331
35,953
1,160
1,824
1,028
441
4,453
FRS 16.73.e.i
(2,054)
FRS 16.73.e.ii
2,128
740
2,868
FRS 16.73.e.iv
(50)
(30)
(15)
(2,054)
FRS 16.73.d
(120)
(50)
(20)
(185)
10,726
3,574
23,933
2,752
40,985
4,000
1,194
2,008
1,252
8,454
300
300
(3,068)
(1,710)
(1,010)
(310)
1,206
300
(67)
(3,328)
1,111
(377)
FRS 16.35.b
FRS 16.73.e.viii
FRS 16.73.d
FRS 16.73.e.i
FRS 16.73.e.ix
(8,106)
FRS 16.73.e.ii
158
1,269
FRS 16.73.e.iii
(150)
(1,847)
FRS 16.73.e.ii
1,506
FRS 16.73.e.iv
20
10
50
12
(67)
92
11,874
3,291
23,397
4,024
42,586
FRS 16.73.d
6,461
1,337
7,798
FRS 16.73.d
2,558
230
2,838
FRS 16.35.b
FRS 16.73.e.viii
50
Disposals
Elimination of accumulated depreciation on
revaluation
Exchange differences
8,364
1,557
9,921
FRS 16.73.d
115
2,628
300
3,043
FRS 16.73.e.vii
Impairment loss
500
Disposals
(10)
(1,153)
(38)
(245)
(67)
(50)
(615)
(40)
(615)
(50)
FRS 16.35.b
(50)
FRS 16.73.e.viii
(10)
500
FRS 16.73.e.v
FRS 16.73.e.ii
(381)
FRS 16.73.e.ii
(98)
(67)
10
15
10,104
1,764
11,868
At 31 December 2013
10,726
3,574
15,569
1,195
31,064
At 31 December 2014
11,874
3,291
13,293
2,260
30,718
At 31 December 2014
FRS 16.73.e.ii
(1,163)
Exchange differences
FRS 16.73.e.vii
FRS 16.35.b
FRS 16.73.e.viii
FRS 16.73.d
Company
$000
Cost:
FRS 16.73.a
At 1 January 2013
1,166
Additions
221
1,387
Additions
626
At 31 December 2014
2,013
FRS 16.73.d
FRS 16.73.e.i
FRS 16.73.d
FRS 16.73.e.i
FRS 16.73.d
Accumulated depreciation:
At 1 January 2013
Depreciation charge for the year
At 31 December 2013 and 1 January 2014
Depreciation charge for the year
At 31 December 2014
669
FRS 16.73.d
115
FRS 16.73.e.vii
784
FRS 16.73.d
150
FRS 16.73.e.vii
934
FRS 16.73.d
603
At 31 December 2014
1,079
FRS 16.74.b
FRS 23.26.a
FRS 23.26 b
FRS 16.77.a-b
If the freehold land and buildings were measured using the cost model, the carrying
amounts would be as follows:
FRS 16.77.e
Group
2014
2013
$000
$000
9,560
8,336
2,730
3,048
(150)
2,580
(200)
2,848
SGX 1207.11
FRS 7.43
FRS 17.31.a
FRS 16.74.a
Leased assets are pledged as security for the related finance lease liabilities.
Assets pledged as security
In addition to assets held under finance leases, the Groups freehold land and buildings
with a carrying amount of $7,822,000 (2013: $6,833,000) are mortgaged to secure the
Groups bank loans (Note 30).
FRS 16.74.a
Impairment of assets
During the financial year, a subsidiary of the Group within the electronic components
segment, XYZ Vietnam Ltd carried out a review of the recoverable amount of its
production equipment because a particular line of specialised electronic component
products had been persistently making losses. An impairment loss of $500,000 (2013:
nil), representing the write-down of these equipment to the recoverable amount was
recognised in Other expenses (Note 8) line item of profit or loss for the financial year
ended 31 December 2014. The recoverable amount of the production equipment was
based on its value in use and the pre-tax discount rate used was 12.4% (2013: 11.2%).
FRS 36.126.a,
130.a-c, e and g
Commentary:
Changes in estimates
In this illustration, there was no change in the useful life of property, plant and equipment of
the Group. Where applicable, an entity should disclose the nature and effect of a change in
accounting estimate that has an effect in the current or subsequent periods.
FRS 8.39
FRS 16.76
2014
$000
2015
$000
2016
$000
Later
$000
(xxx)
(xxx)
(xxx)
(xxx)
Entities are also encouraged to disclose the following information, which users of financial
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.
FRS 16.79
If the amount of borrowing costs eligible for capitalisation have been determined by applying a
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.
2013
$000
$000
3,955
3,825
Balance sheet:
FRS 40.76
At 1 January
Additions (subsequent expenditure)
500
489
129
FRS 40.76.d
FRS 40.76.f
FRS 40.76.e
(300)
Exchange differences
At 31 December
4,645
3,955
324
246
FRS 40.76a
Income statement:
Rental income from investment properties:
- Minimum lease payments
- Contingent rent based on tenants turnover
21
45
345
291
(60)
(55)
FRS 40.75.f.ii
(12)
(10)
FRS 40.75.f.iii
(72)
(65)
FRS 17.56.b
FRS 40.75.f.i
The Group has no restrictions on the realisability of its investment properties and no
contractual obligations to purchase, construct or develop investment property or for
repairs, maintenance or enhancements.
FRS 40.75.g
FRS 40.75.h
FRS 40.75.a
FRS 40.75.e
FRS 40.75.g
Existing Use
Tenure
Unexpired
lease term
Shops
Leasehold
983 years
Residential
Leasehold
92 years
Offices
Leasehold
58 years
SGX 1207.11.b
Commentary
Contractual obligations relating to investment properties
FRS 40.75.h
When a valuation obtained for investment property is adjusted significantly for the purpose of
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
disclosed.
FRS 40.77
FRS 40.75.e
This disclosure is only required for entities listed on the SGX-ST, where the aggregate value for
all properties for development, sale or for investment purposes 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. This disclosure may be included in other parts
of the entitys annual report instead.
SGX 1207.11
Group
Deferred
Development
Costs
Goodwill
Brands
Club
Membership
$000
$000
$000
$000
$000
245
240
100
984
1,569
Total
FRS 1.77
Cost:
At 1 January 2013
Additions internal development
200
200
Exchange differences
12
22
250
245
100
1,196
1,791
FRS 38.118.c
FRS 38.118.e.i
FRS 38.118.e.vii
FRS 38.118.c
Additions:
- Internal development
200
200
FRS 38.118.e.i
772
500
1,272
FRS 38.118.e.i
(250)
(250)
FRS 38.118.e.ii
Exchange differences
15
14
36
At 31 December 2014
1,037
752
100
1,160
3,049
FRS 38.118.c
FRS 38.118.e.vii
70
131
201
FRS 38.118.c
Amortisation
10
242
252
FRS 38.118.e.vi
Exchange differences
FRS 38.118.e.vii
80
378
458
FRS 38.118.c
Amortisation
10
210
220
Impairment loss
200
200
FRS 38.118.e.vi
FRS 36.130.b
FRS 38.118.e.iv
(250)
(250)
FRS 38.118.e.ii
Exchange differences
At 31 December 2014
90
540
630
At 31 December 2013
250
245
20
818
1,333
At 31 December 2014
1,037
752
10
620
2,419
FRS 38.118.e.vii
FRS 38.118.c
FRS 38.122.b
FRS 38.122.b
FRS 38.118.d
FRS 36.80.b
Property
segment
Total
2014
2013
2014
2013
2014
2013
$000
$000
$000
$000
$000
$000
Goodwill
782
255
250
1,037
250
FRS 36.134.a
Brands
752
245
752
245
FRS 36.134.b
The recoverable amounts of the CGUs have been determined based on value in use
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
components segment
Growth rates
Pre-tax discount rates
Property
segment
2014
2013
2014
2013
5.1%
4.8%
6.1%
5.5%
FRS 36.134.d.iv
11.3%
11.1%
12.3%
12.8%
FRS 36.134.d.v
FRS 36.134.d.i
Market share assumptions These assumptions are important because, as well as using
industry data for growth rates (as noted above), management assesses how the CGUs
position, relative to its competitors, might change over the budget period. Management
expects the Groups share of the electronics and property markets to be stable over the
budget period.
FRS 36.134.f.i
FRS 36.134.f.ii
FRS 36.134.f.iii
FRS 36.126.a,
FRS 36.130.a-c
The disclosure of a description, the carrying amount and remaining amortisation period are
required for any individual intangible asset that is material to the entitys financial
statements.
FRS 38.122.b
If some or all of the carrying amount of goodwill or intangible assets with indefinite useful
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 entitys 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 entitys total carrying amount of goodwill or intangible
assets with indefinite useful lives, an entity shall disclose that fact, together with:
FRS 36.135
(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)
(d)
(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)
(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 units
(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
In this illustration, the recoverable amounts of such CGUs were determined based on value in
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 managements 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.
XYZ Holdings (Singapore) Limited | 101
FRS 36.134.e
Provided specified criteria are met, if the most recent detailed calculation made in a
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.
FRS 36.136
Forecasted growth rates used to extrapolate cash flow projections beyond the five-year period
The entity is required to disclose the justification if the growth rate used to extrapolate cash
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.
FRS 36.134.d.iv
If a reasonably possible change in any key assumptions used by management would cause
the carrying values of CGUs to materially exceed the recoverable amounts, an entity should
disclose
-
the amount by which the CGUs recoverable amount exceeds its carrying amount,
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 CGUs recoverable amount to be equal to
its carrying amount.
FRS 36.134.f
2013
$000
$000
6,500
6,360
Cost:
At 1 January
Exchange differences
220
140
6,720
6,500
767
630
132
130
10
909
767
5,811
5,733
137
132
- Later than one year but not later than five years
548
528
5,126
5,073
At 31 December
Accumulated amortisation:
At 1 January
Amortisation for the year
Exchange differences
At 31 December
Net carrying amount
Amount to be amortised:
The Group has land use rights over two plots of state-owned land in Peoples Republic of
China (PRC) where the Groups PRC manufacturing and storage facilities reside. The land
use rights are not transferable and have a remaining tenure of 43 years (2013: 44 years).
FRS 17.35.a
FRS 17.35.d
Shares, at cost
Discount on loans to subsidiaries
Issuance of shares for acquisition of subsidiary
Impairment losses
2014
2013
$000
$000
11,132
11,042
540
540
1,475
(1,000)
(1,000)
12,147
10,582
FRS 27.10.a
Name
Principal
place of
business
Principal activities
Proportion (%)
of ownership
interest
2014
2013
FRS 27.43.b
FRS 24.12
Singapore
Manufacture of electronic
components
100
100
Singapore
Investment holding
100
100
Singapore
Investment holding
100
100
Singapore
Installation of fire
prevention equipment
and provision of
installation services
100
100
Peoples
Republic
of China
Manufacture of electronic
components
75
75
Vietnam
Manufacture of electronic
components
100
80
Malaysia
Manufacture of electronic
components
80
-*
Singapore
Property development
100
100
Malaysia
Property development
100
100
Singapore
Property investment
100
100
SGX 717
ii
* The Group holds 25% ownership interest in MSAX Sdn Bhd in 2013 and account for it as an associate
(Note 19).
FRS 112.12
The Group has the following subsidiaries that have NCI that are material to the
Group.
FRS 112.B10.a
Name of
Subsidiary
Principal
place of
business
Proportion of
ownership
interest held
by noncontrolling
interest
Profit/(Loss)
allocated to
NCI during
the reporting
period
$000
Accumulated
NCI at the
end of
reporting
period
$000
Dividends
paid to
NCI
25%
120
1,220
100
20%
40
400
30
25%
270
1,200
200
$000
31 December 2014:
XYZ China
Co. Ltd
MSAX Sdn
Bhd
Peoples
Republic of
China
Malaysia
31 December 2013:
XYZ China
Co. Ltd
Peoples
Republic of
China
Significant restrictions:
The nature and extent of significant restrictions on the Groups ability to use or
access assets and settle liabilities of subsidiaries with material non-controlling
interests are:
FRS 112.10.b.i
FRS 112.13
Cash and cash equivalents of $49,000 held in Peoples 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.
c.
As at 31
December
2013
$000
As at 31
December
2014
$000
As at 31
December
2013
$000
5,000
(3,022)
4,800
(3,000)
2,082
(582)
2,652
(1,302)
1,978
1,800
1,500
1,350
522
(198)
830
(366)
886
(386)
720
(120)
324
464
500
600
2,302
2,264
2,000
1,950
FRS 112.12.g
FRS 112.B10.6
2013
$000
867
953
2014
$000
2013
$000
554
482
260
286
166
145
(44)
(49)
(28)
(24)
216
237
138
121
10
(8)
62
(71)
226
229
200
50
2013
$000
2014
$000
2013
$000
186
235
130
42
Acquisition of significant
Property, Plant and
Equipment
(68)
(778)
(229)
(553)
Commentary:
An entity shall disclose information that enables users of its consolidated financial statements
(a) to understand:
i.
ii. the interest that non-controlling interests have in the groups 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.
FRS 112.10
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.
FRS 112.B2
In this illustration, it is assumed that there was no reversal of impairment loss on investment in
subsidiaries. Where applicable, an entity should disclose the events and circumstances that led
to the reversal of such impairment loss.
FRS 36.130.a
An entity shall disclose the country of incorporation if different from the principal place of
business of the subsidiary.
FRS 112.12.b
FRS 27.17.b.ii
An entity shall disclose the proportion of voting rights if different from the proportion of
ownership interests held.
FRS 112.12.d
FRS 27.17.b.iii
FRS 112.13
(a) Significant restrictions (e.g. statutory, contractual and regulatory restrictions) on its
ability to access or use the assets and settle the liabilities of the group, such as:
i.
those that restrict the ability of a parent or its subsidiaries to transfer cash or other
assets to (or from) other entities within the group.
ii. guarantee or other requirements that may restrict dividends and other capital
distributions being paid, or loans and advances being made or repaid, to (or from)
other entities within the group.
(b) The nature and extent to which protective rights of non-controlling interests can
significantly restrict the entitys ability to access or use the assets and settle the liabilities
of the group (such as when a parent is obliged to settle liabilities of a subsidiary before
settling its own liabilities, or approval of non-controlling interests is required either to
access the assets or to settle the liabilities of a subsidiary).
(c) The carrying amounts in the consolidated financial statements of the assets and liabilities
to which those restrictions apply.
The summarised financial information presented shall be the amounts before inter-company
eliminations.
FRS 112.B11
FRS 112.14
If during the reporting period a parent or any of its subsidiaries has, without having a
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:
FRS 112.15
(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
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.
FRS 112.16
An entity shall disclose any current intentions to provide financial or other support to a
consolidated structured entity, including intentions to assist the structured entity in obtaining
financial support.
FRS 112.17
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
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 112.9A
(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:
FRS 112.9B
- 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)
FRS 112.19B
(g) If, during the reporting period, an investment entity or any of its subsidiaries has, or
without having a contractual obligation to do so, provided financial or other support to an
unconsolidated subsidiary (e.g. purchasing assets of, or instruments issued by, the
subsidiary or assisting the subsidiary in obtaining financial support), the entity shall
disclose:
-
(h) The terms of any contractual arrangements that could require the entity or its
unconsolidated, controlled, structured entity, including events or circumstances that could
expose the reporting entity to a loss (e.g. liquidity arrangements or credit triggers
associated with obligations to purchase assets of the structured entity or to provide
financial support).
(i)
If during the reporting period an investment entity or any of its unconsolidated subsidiaries
has, without having a contractual obligation to do so, provided financial or other support
to an unconsolidated, structured entity that the investment entity did not control, and if
that provision of support resulted in the investment entity controlling the structured
entity, the investment entity shall disclose an explanation of the relevant factors in
reaching the decision to provide that support.
FRS 112.19C
FRS 112.19D.a
FRS 112.19D.b
FRS 112.19E
FRS 112.19F
FRS 112.19G
Acquisition of subsidiary
On 18 October 2014 (the acquisition date), the Groups subsidiary company, XYZ
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.
FRS 103.B64.a-c
The Group has acquired MSAX in order to strengthen its position as a leading
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.
FRS 103.B64.d
The Group has elected to measure the non-contolling interest at the non-controlling
interests proportionate share of MSAXs net identifiable assets.
The fair value of the identifiable assets and liabilities of MSAX as at the acquisition
date were:
Fair value
recognised on
acquisition
FRS 103.B64.i
$000
1,269
500
1,089
Inventories
752
417
4,027
(1,038)
(50)
(48)
(100)
(1,236)
2,791
(558)
FRS 103.B64.o
772
FRS 103.B64.k
3,005
Consideration transferred for the acquisition of MSAX
Cash paid
Equity instruments issued (1,305,310 ordinary shares of XYZ Holdings
(Singapore) Limited)
Deferred cash settlement
Contingent consideration recognised as at acquisition date
Total consideration transferred
Fair value of equity interest in MSAX held by the Group immediately
before the acquisition
200
FRS 103.B64.f.i
1,475
FRS 103.B64.f.iv
200
FRS 103.B64.f.iii
450
FRS 103.B64.f.iii,
2,325
FRS 103.B64.g.i
FRS 103.B64.f
680
FRS 103.B64.p.i
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
(2,125)
FRS 7.43
200
FRS 7.40.b
(417)
FRS 7.40.c
217
FRS 7.42
FRS 103.B64.f.iv
FRS 103.B64.g.ii
a)
$385,000, if the entity generates $1,000,000 profit before tax for a period of
12 months after the acquisition date, or
FRS 103.B64.g.iii
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
estimated at $450,000.
FRS 103.B64.g.i
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
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
Groups profit or loss for the year ended 31 December 2014.
FRS 103.58
FRS 103.B67.b
Transaction costs
Transaction costs related to the acquisition of $300,000 have been recognised in the
Administrative expenses line item in the Groups profit or loss for the year ended
31 December 2014.
FRS 103.B64.p.ii
FRS 103.B64.h
FRS 103.B64.e
FRS 103.B64.k
FRS 103.B64.q.i
FRS 103.B64.q.ii
FRS 103.B67.a
FRS 112.18
$000
Consideration paid for acqusition of non-controlling interests
800
(650)
150
Commentary:
Acquisition of subsidiary
An entity shall also make disclosures of business combinations in accordance to FRS 103.B64
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
are material collectively, an entity shall disclose in aggregate the information required by FRS
103.B64.e-q.
FRS 103.B65
An acquirer shall also disclose information that enables users of its financial statements to
evaluate the financial effects of adjustments recognised in the current reporting period that
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
was determined provisionally in the previous reporting period:
FRS 103.B67.a
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.
FRS 103.B64.j
FRS 103.56
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 interests proportionate share of MSAXs
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
estimated by applying the income approach that is corroborated by market approach. The
fair value estimates are based on:
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
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.
FRS 103.B64.o.ii
FRS 103.B64.n
$000
XXX
(XXX)
XXX
Represented by:
Decrease in foreign currency translation reserve
(XXX)
(XXX)
Other reserves
Increase in equity attributable to parent entity
XXX
XXX
FRS 112.10.b.iii
FRS 112.18
FRS 112.10.b.iv
FRS 7.40.d
The value of assets and liabilities of Sun Pte Ltd. recorded in the consolidated financial
statements as at 27 February 2014, and the effects of the disposal were:
2014
Property, plant and equipment
Trade and other receivables
Inventories
Cash and short-term deposits
$000
XXX
XXX
XXX
XXX
XXX
(XXX)
(XXX)
(XXX)
Cash consideration
Cash and cash equivalents of the subsidiary
XXX
(XXX)
XXX
Gain on disposal:
2014
$000
Cash received
Net assets derecognised
Fair value of retained interest
Cumulative exchange differences in respect of the net
assets of the subsidiary reclassified from equity on
loss of control of subsidiary
Gain on disposal
XXX
(XXX)
XXX
XXX
XXX
The gain or loss on disposal attributable to measuring the retained interest amounted to
$XXX was included in other income in profit or loss.
FRS 112.19
FRS 112.21
FRS 27.17.b
Summarised financial information in respect of XYZ-ABC JV Co. Ltd. based on its FRS
financial statements, and reconciliation with the carrying amount of the investment in the
consolidated financial statements are as follows:
FRS 112.21.b.ii
FRS 112.B12
FRS 112.B13
2013
$000
$000
176
132
Trade receivables
542
808
Current assets
718
940
3,220
2,898
100
100
Non-current assets
3,320
2,998
Total assets
4,038
3,938
Current liabilities
(200)
(412)
(490)
(480)
(100)
(100)
(590)
(580)
Total liabilities
(790)
(992)
Net assets
3,248
2,946
3,148
2,846
50%
50%
1,574
1,423
100
100
1,674
1,523
Revenue
Operating expenses
Interest expense
2014
$000
214
(58)
(5)
2013
$000
199
(65)
(6)
151
-
128
-
151
151
128
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.
FRS 112.B12.a
FRS 112.22.a
Commentary:
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 entitys relationship with the joint operations, (by, for example,
describing the nature of the activities of the joint operation and whether it is strategic to
the entitys activities)
FRS 112.21.a
Other disclosures required for joint ventures are not applicable for joint operations.
For interests in joint arrangements, 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 joint arrangements, including
the nature and effects of its contractual relationship with the other investors with joint
control of joint arrangements; and
FRS 112.20
(b) the nature of, and changes in, the risks associated with its interests in joint ventures.
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
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:
(a) the carrying amount of its interests
(b) its share of the joint ventures
i.
FRS 112.B16
In this illustration, the Group does not have any unrecognised share of losses of its
investment in joint venture.
FRS 112.22.c
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.
An entity shall disclose the proportion of voting rights held for each joint arrangement if
different from the proportion of ownership interests held.
FRS 112.21.a.iv
An entity shall disclose the principal place of business for each joint arrangement if different
from the country of incorporation of the joint arrangement.
FRS 112.21.a.iii
An entity may present the summarised financial information on the basis of the joint
ventures financial statements if:
FRS 112.B15
(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
income. For each material joint venture, an entity shall disclose the following information:
FRS 112.B13
interest expense
An entity shall also disclose the nature and extent of any significant restrictions (e.g.
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.
FRS 112.22.a
2013
$000
$000
4,560
4,465
5,576
5,420
Other associates
Name
Country of
incorporation
Principal activities
459
436
10,595
10,321
FRS 112.B16
10,600
10,400
FRS 112.21.b.iii
Proportion (%) of
ownership interest
2014
2013
35
35
25
45
45
FRS 112.21
FRS 27.17.b
Singapore
Malaysia
Singapore
Manufacture of
electronic
components
Manufacture
of
electronic
components
Investment
properties
Singapore
Investment properties
47
47
Singapore
Investment properties
22
22
i
ii
SGX 717
*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
recognised losses relating to Heart Land Ltd where its share of losses exceeds the Groups
interest in this associate. The Groups 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 years losses. The Group has no obligation in respect of
these losses.
FRS 112.21.a.ii
FRS 112.22.c
The Group has not recognised its share of the current year profit of $8,000 (2013: nil)
relating to Drill Pte Ltd as the Groups 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
from QSpeed Pte Ltd and HKI Pte Ltd respectively. QSpeed Pte Ltd. is restricted by
regulatory requirements by paying dividends greater than 60% of the annual profit.
FRS 112.B12.a
FRS 112.22.a
FRS 112.21.c.ii
FRS 112.B16
2013
$000
1,237
555
223
174
1,460
729
The summarised financial information in respect of QSpeed Pte Ltd and HKI Pte Ltd,
based on its FRS financial statements and a reconciliation with the carrying amount of
the investment in the consolidated financial statements are as follows:
FRS 112.21.b.i
FRS 112.B12
FRS 112.B14
$000
$000
Current assets
8,040
8,318
6,987
6,510
8,728
8,510
12,390
10,870
550
550
315
315
Total assets
17,318
17,378
19,692
17,695
Current liabilities
(1,388)
(1,211)
(2,433)
(1,788)
(4,494)
(5,146)
(6,229)
(5,188)
Total liabilities
(5,882)
(6,357)
(8,662)
(6,976)
Net assets
11,436
11,021
11,030
10,719
10,886
10,471
10,715
10,404
35%
35%
47%
47%
3,810
3,665
5,036
4,890
Goodwill on acquisition
550
550
315
315
Other adjustments
200
250
225
215
4,560
4,465
5,576
5,420
Goodwill
Revenue
2014
2013
2014
2013
$000
$000
$000
$000
20,269
18,467
25,202
23,850
(47)
(22)
(22)
(3)
(42)
(14)
(25)
FRS 112.B14.b
For interests in associates, 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 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
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.
An entity shall disclose the principal place of business for each associate if different from the
country of incorporation of the associate.
FRS 112.21.a.iii
An entity shall disclose the proportion of voting rights held for each associate if different from
the proportion of ownership interests held.
FRS 112.21.a.iv
If the Group have stopped recognising its share of losses of its associate when applying the
equity method, it shall disclose the unrecognised share of losses of the associate, both for the
reporting period and cumulatively.
FRS 112.22.c
An entity shall also disclose the nature and extent of any significant restrictions (e.g. resulting
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.
FRS 112.22.a
In this illustration, the Group does not have any immaterial associate that is classified as
discontinued operation.
The following disclosures are required, in aggregate for all individually immaterial associates:
FRS 112.B16
ii.
iii.
iv.
An entity may present the summarised financial information on the basis of the associates
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.
FRS 112.B15
Company
Consolidated
income
statement
Balance sheet
2014
2013
2014
2013
2014
2013
$000
$000
$000
$000
$000
$000
(601)
(633)
146
251
(217)
(218)
(62)
(111)
(47)
(20)
(60)
60
(1,159)
(903)
(150)
(94)
(4)
(3)
(9)
(48)
(9)
(13)
(176)
(145)
31
20
(8)
(5)
(2,273)
(1,904)
(226)
(13)
(231)
419
427
23
Other items
28
470
463
(5)
19
(4)
(1)
17
(8)
185
12
18
21
26
252
FRS 12.81.e
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
venture
FRS 12.81.f
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
Groups 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.
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).
FRS 12.87
FRS 12.81.i
Commentary:
Deferred tax income or expense recognised in profit or loss
This disclosure is required in situations where the amount of the deferred tax income or
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.
FRS 12.81.g.ii
FRS 1.77-78.b
FRS 107.7 and
31
Company
2014
2013
2014
2013
$000
$000
$000
$000
21,694
24,191
540
507
361
288
300
Staff loans
155
150
50
50
Refundable deposits
102
119
22,852
24,967
338
350
3,409
2,061
FRS 24.18.b
10,563
12,574
FRS 24.18.b
1,230
1,230
1,230
1,230
FRS 24.18.b
1,500
1,500
1,500
1,500
FRS 24.18.b
63
48
51
36
2,793
2,778
16,753
17,401
25,645
27,745
17,091
17,751
6,117
4,858
4,621
4,145
FRS 24.18.b
Staff loans
Total trade and other receivables (current and
non-current)
Add: Cash and short-term deposits (Note 27)
Less: Sales tax receivables
Total loans and receivables
(15)
31,747
(13)
32,590
(3)
21,709
(2)
FRS 107.8.c
21,894
Trade receivables
Trade receivables are non-interest bearing and are generally on 30 to 90 days terms.
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
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.
FRS 107.36.b
FRS 107.34.a
Company
2014
2013
2014
2013
$000
$000
$000
$000
4,128
4,525
Renminbi
1,567
2,015
Amounts due from related companies are non-trade related, unsecured, non-interest
bearing, repayable upon demand and are to be settled in cash.
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.
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.
FRS 107.7,31
and 36.b
FRS 24.18.b
2013
$000
$000
4,105
5,234
30 - 60 days
568
832
61- 90 days
822
524
91-120 days
245
262
20
5,760
6,852
FRS 107.37.a
FRS 107.36.b
FRS 107.IG28
Individually impaired
2014
2013
2014
2013
$000
$000
$000
$000
1,220
1,350
150
80
(100)
(50)
(350)
(410)
870
940
50
30
410
510
50
60
85
95
50
20
FRS 107.37.b
FRS 107.IG29.b
FRS 107.16
(130)
(15)
350
(205)
(30)
10
410
100
50
Trade receivables that are individually determined to be impaired at the end of the
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.
FRS 107.37.b
FRS 107.36.b
FRS 107.37.b
FRS 107.36.b
FRS 24.18.c
There has been no movement in this allowance account for the financial year ended 31
December 2014 (2013: charge of $100,000 for impairment loss).
31 December 2014
$000
Gross carrying
amounts
Description
Trade receivables
Trade payables
6,100
-
Gross amounts
offset in the
balance sheet
(2,540)
(2,540)
FRS 107.13C.a
FRS 107.13C.b
FRS 107.13C.c
3,560
-
31 December 2013
$000
Description
Trade receivables
Trade payables
5,450
-
(1,730)
(1,730)
3,720
-
Receivables subject to an enforceable master netting arrangement that are not otherwise
set-off
The Group regularly purchases electronic raw materials from and sell electronic products
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.
FRS 107.13E
The Groups 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
FRS 107.13C.e
31 December 2014
$000
Gross carrying
amounts
Related amounts
not set off in the
balance sheet
Net amount
Description
Trade receivables
3,560
(1,493)
2,067
Trade payables
1,493
(1,493)
31 December 2013
$000
Description
Trade receivables
Trade payables
4,230
1,699
(1,699)
(1,699)
2,531
-
When an entity holds collateral (of financial or non-financial assets) and is permitted to sell or
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
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:
FRS 107.15
FRS 107.38
An entity shall disclose a description of collateral held as security and of other credit
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.
FRS 107.36.b
Ageing analysis of financial assets that are past due but not impaired
FRS 107 requires the disclosure of an analysis by class of the age of financial assets that are
past due but not impaired. Any entity uses its judgement to determine the appropriate time
bands to be disclosed.
FRS 107 requires disclosure requirements where financial assets are impaired by credit losses
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.
FRS 107.16
FRS 107 require an entity to disclose information to enable users of its financial statements to
evaluate the effect or potential effect of netting arrangements on the entitys financial position
which includes the effect or potential effect of rights of set-off associated with the entitys
recognised financial assets and recognised financial liabilities that are within the scope of
paragraph 13A of FRS 107.
FRS 107.13B
These disclosures are required for all recognised financial instruments that are set off in
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.
FRS 107.13A
To meet the objective above, an entity shall disclose, at the end of the reporting period, the
following quantitative information separately for recognised financial assets and recognised
financial liabilities that are within the scope of paragraph 13A of FRS 107:
FRS 107.13C
(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
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.
The total amount disclosed for an instrument in accordance with (d) above shall be limited to
the net amounts presented in the balance sheet for that instrument.
FRS 107.13D
Group
2014
2013
$000
$000
Current:
FRS 107.8.a.ii
1,512
1,260
Non-current:
FRS 107.8.d
1,563
980
1,746
848
139
28
500
600
3,948
2,456
660
650
4,608
3,106
FRS 107.31
Held-to-maturity investment
- 3% p.a. SGD government bonds due 31 March 2016 (quoted)
FRS 107.8.b
FRS 107.14
Impairment losses
During the financial year, the Group recognised the following impairment losses:
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:
Categories of financial assets and financial liabilities
FRS 107 required disclosure of the carrying amounts of financial instruments under each of
the classification in FRS 39, either on the face of the balance sheet or in the notes. The
categories of financial instruments include financial assets and financial liabilities that are
classified as held for trading, those that are designated upon initial recognition as financial
assets or financial liabilities at fair value through profit or loss, held-to-maturity investments,
loans and receivables, available-for-sale financial assets, and financial liabilities measured at
amortised cost. In this illustration, the disclosure requirement is met in the respective notes to
the financial statements (refer to this note, Note 21, 26 and 31). Alternatively, the disclosure
of the carrying amounts of financial instruments under each of the classifications in FRS 39
may be presented in a separate centralised note.
FRS 107.8
Information such as the interest rates and maturity dates of the debt securities, and countries
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.
FRS 107.31
If an entity has reclassified any financial asset measured at cost or amortised cost to fair value
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.
FRS 107.12
Please refer to commentary no. 3 of Note 2.16 (c) Impairment of available-for-sale financial
assets.
2014
2013
$000
$000
34,089
24,552
(33,796)
(24,740)
FRS 11.40.a
293
(188)
651
398
FRS 11.42.a
(358)
(586)
FRS 11.42.b
293
(188)
Presented as:
Gross amount due from customers for contract work-in-progress
Gross amount due to customers for contract work-in-progress
Advances received included in gross amount due to customers for
contract work
45
60
65
80
FRS 11.40.b
FRS 11.40.c
Commentary:
Advances received before the related work is performed
Where applicable, an entity is required to disclose the amount of advances received from
customer before the related construction work is performed.
FRS 11.40.b
24.
Development properties
Group
2014
2013
$000
$000
Freehold land
1,800
1,800
Development costs
1,100
850
2,900
2,650
During the financial year, borrowing costs of $35,000 (2013: $33,000), arising from
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.
The freehold land under development has been pledged as security for a bank loan (Note
30).
FRS 2.36.h
Commentary:
List of development properties
Where the aggregate value for all properties for development, sale or for investment purposes
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.
SGX 1207.11
%
Site area Gross floor
owned (square
area
metre)
(square
metre)
Stage of completion
as at date of annual
report (expected
year of completion)
20,500
220,000
60% (2013)
100%
98,000
450,000
70% (2013)
100%
88,000
300,000
30% (2014)
FRS 1.61
Group
2014
2013
$000
$000
4,994
5,552
Balance sheet:
Raw materials (at cost)
Work-in-progress (at cost)
Finished goods (at cost or net realisable value)
FRS 2.36.b
3,823
3,491
15,203
15,357
24,020
24,400
80,567
82,122
352
257
FRS 2.36.e
FRS 2.36.f
Income statement:
Inventories recognised as an expense in cost of sales
FRS 2.36.d
(190)
The reversal of write-down of inventories was made when the related inventories were
sold above their carrying amounts in 2013.
FRS 2.36.g
The Group has subjected finished goods amounting to $1,500,000 (2013: $1,500,000),
to a floating charge as security for bank overdraft facilities (Note 30).
FRS 2.36.h
Group
Contract/
Notional
Amount
Forward currency contracts
9,850
2,500
Total derivatives
Add: Held for trading
investments (Note 22)
Add: Contingent consideration
for business combination (Note
32)
Total financial assets/(liabilities)
at fair value through profit or
loss
2014
2013
$000
$000
Assets
150
20
Liabilities
(22)
8,560
Liabilities
60
45
(22)
105
170
(22)
105
1,260
2,500
Assets
170
1,512
Contract/
Notional
Amount
(685)
1,682
(707)
1,365
At the Company level, the carrying amount of financial liability at fair value through profit
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
Groups 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:
Categories of financial assets and financial liabilities
FRS 107.8.a
and e
FRS 107.8.e
Group
Company
2014
2013
2014
2013
$000
$000
$000
$000
5,697
4,598
4,256
3,985
420
260
365
160
6,117
4,858
4,621
4,145
Cash at banks earns interest at floating rates based on daily bank deposit rates. Shortterm 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
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
follows:
Group
FRS 107.34.a
Company
2014
2013
2014
2013
$000
$000
$000
$000
442
325
108
120
20
15
For the purpose of the consolidated cash flow statement, cash and cash equivalents
comprise the following at the end of the reporting period:
FRS 7.45
Group
2014
2013
$000
$000
6,117
4,858
250
6,367
Bank overdrafts (Note 30)
Cash and cash equivalents
(498)
5,869
4,858
(1,444)
3,414
Commentary:
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
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
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
classified as non-current assets.
FRS 7.48
FRS 7.49
FRS 1.66.d
28. Provisions
Group
At 1 January 2014
Acquisition of a subsidiary (Note 17)
Arose during the financial year
Maintenance
warranties
Legal claim
Total
$000
$000
$000
2,136
2,136
FRS 37.84.a
50
50
116
420
536
FRS 37.84.b
(415)
(415)
FRS 37.84.c
(60)
(60)
FRS 37.84.d
30
30
FRS 37.84.e
Utilised
Exchange differences
At 31 December 2014
Current 2014
Non-current 2014
Current 2013
Non-current 2013
45
49
1,902
424
2,326
377
424
801
1,525
1,525
1,902
424
2,326
295
295
1,841
1,841
2,136
2,136
FRS 37.84.a
Maintenance warranties
A provision is recognised for expected warranty claims on certain specialised electronic
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
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.
FRS 37.85
FRS 1.98.g
Legal claim
On 30 June 2014, a competitor of the Group made a claim against one of the Groups
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 managements 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.
FRS 37.85
Commentary:
Comparative of movements in provision
FRS 37.84
FRS 103.B67.c
2013
$000
$000
2,694
1,644
2,040
1,030
34
20
4,768
2,694
730
540
239
180
Cost:
At 1 January
Received during the financial year
Exchange differences
At 31 December
Accumulated amortisation:
At 1 January
Amortisation
Exchange differences
At 31 December
11
10
980
730
300
210
3,488
1,754
3,788
1,964
Deferred capital grants relate to government grants received for the acquisition of
equipment for research activities undertaken by the Groups subsidiary in Peoples
Republic of China to promote technology advancement and transfer. There are no
unfulfilled conditions or contingencies attached to these grants.
FRS 20.39.b
FRS 20.39.c
Company
2014
2013
2014
2013
$000
$000
$000
$000
Current:
Obligations under finance leases (Note
37(d))
Bank overdrafts
6% p.a. fixed rate SGD bank loan
2015
216
16
On demand
498
1,444
2015
475
830
1,189
2,290
Non-current:
Obligations under finance leases (Note
37(d))
2016-2024
720
160
2016-2020
3,100
3,000
3,100
3,000
31 July 2020
1,545
2016-2020
2,200
2,200
2,200
2,200
30 November 2018
5,400
5,400
2,000
450
428
450
428
13,415
13,188
5,750
5,628
14,604
15,478
5,750
5,628
Bank loans:
- 8% p.a. fixed rate USD loan
2017-2020
FRS 1.73
FRS 107.7
FRS 32.28 and 31
The carrying amount of the liability component of CRPS at the end of the reporting period
is arrived at as follows:
Group and Company
2014
2013
$000
$000
505
(96)
505
(96)
409
409
19
22
19
41
19
450
428
FRS 32.28
FRS 32.28
If during the period, there were defaults or breaches of loan agreement terms, the entity
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
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).
FRS 107.18
FRS 107.19
If an entity has issued an instrument that contains both a liability and an equity component
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.
FRS 107.17
Group
Company
2014
2013
2014
2013
$000
$000
$000
$000
Trade payables
15,698
17,426
332
290
Other payables
1,381
1,129
138
124
288
379
17,367
18,934
470
414
200
17,717
19,140
470
414
2,974
2,579
481
446
14,604
15,478
5,750
5,628
35,295
36,197
6,701
6,488
FRS 24.18
FRS 107.8.f
FRS 107.34.a
Group
Company
2014
2013
2014
2013
$000
$000
$000
$000
3,140
2,962
66
49
Purchases from related companies are made at terms equivalent to those prevailing in
arms length transactions with third parties.
FRS 24.23
Commentary:
Categories of financial assets and financial liabilities
Disclosures that related party transactions were made on terms equivalent to those that
prevail in arms length transactions are made only if such terms can be substantiated.
FRS 24.23
FRS 1.77
FRS 107.7 and 31
Group
2014
$000
2013
$000
2014
$000
2013
$000
2,948
2,571
401
346
Company
26
80
100
2,974
2,579
481
446
685
685
3,659
2,579
1,166
446
Commentary:
Contingent consideration for business combination
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
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.
FRS 103.B64
Group
2015
$000
Initial fair value of the contingent consideration at acquisition date
Fair value adjustment as at 31 December 2014
450
235
685
15
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.
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.
FRS 103.B64.g.i
FRS 103.58
Group
2015
$000
Cash flows from operating activities:
Settlement of contingent consideration for business combination
( 250)
(450)
FRS 7.16
a) Share capital
Group and Company
2014
No. of
shares
000
FRS 1.79
2013
No. of
shares
000
$000
$000
FRS 1.79.a.ii
23,080
9,665
22,940
9,510
1,305
1,475
(50)
140
155
24,385
11,090
23,080
9,665
FRS 1.79.a. iv
FRS 32.37
FRS 102.50
FRS 1.79.a.ii and
iv
The holders of ordinary shares (except treasury shares) are entitled to receive
dividends as and when declared by the Company. All ordinary shares carry one vote per
share without restrictions. The ordinary shares have no par value.
FRS 1.79.a.v
The Company has two employee share option plans under which options to subscribe
for the Companys ordinary shares have been granted to employees of the Group.
FRS 1.79.a.vii
FRS 1.79.a.iii
b) Treasury shares
Group and Company
2014
No. of
shares
000
At 1 January
Acquired during the financial year
Reissued pursuant to employee share option
plans:
- For cash on exercise of employee share
options (Note 35)
- Transferred from employee share option
reserve
- Gain transferred to gain or loss on reissuance
of treasury shares
(200)
$000
No. of
shares
000
$000
(254)
75
81
79
(65)
95
75
At 31 December
FRS 1.79.a.vi
2013
(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
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.
FRS 32.33
Other reserves
FRS 1.79.b
Employee benefits
Group
2014
2013
$000
$000
17,758
16,332
2,107
2,166
245
150
392
376
20,502
19,024
FRS 19.46
FRS 102.51.a
FRS 1.104
FRS 102.44
FRS 102.45.a
FRS 102.45.a
There has been no cancellation or modification to the SEOP and GEOP during both 2015
and 2014.
Movement of share options during the financial year
The following table illustrates the number (No.) and weighted average exercise prices
(WAEP) of, and movements in, share options during the financial year:
2014
2013
No.
WAEP ($)
No.
WAEP ($)
Outstanding at 1 January
425,000
1.22
480,000
1.20
- Granted
200,000
1.30
125,000
1.26
FRS 102.45.b.ii
(25,000)
1.05
FRS 102.45.b.iii
- Forfeited
FRS 102.45.b.i
- Exercised
(75,000)
1.08
(140,000)
1.11
FRS 102.45.b.iv
- Expired
(25,000)
1.16
(15,000)
1.15
FRS 102.45.b.v
Outstanding at 31 December
525,000
1.24
425,000
1.22
FRS 102.45.b.vi
Exercisable at 31 December
200,000
1.18
195,000
1.10
FRS 102.45.b.vii
The weighted average fair value of options granted during the financial year was
$1.14 (2013: $1.03).
FRS 102.47.a
The weighted average share price at the date of exercise of the options exercised
during the financial year was $1.30 (2013: $1.20).
FRS 102.45.c
The range of exercise prices for options outstanding at the end of the year was $1.05
to $1.30 (2013: $1.05 to $1.26). The weighted average remaining contractual life
for these options is 3.90 years (2013: 3.86 years).
FRS 102.45.d
FRS 102.46
The fair value of the share options granted under the SEOP is estimated at the grant date
using a binomial option pricing model, taking into account the terms and conditions upon
which the share options were granted.
FRS 102.47.a.i
The fair value of share options granted under the GESP is estimated at the date of the
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
December 2014 and 2013:
FRS 102.47.a.i
SEOP (Binomial)
2014
Dividend yield (%)
2013
2013
3.13
3.01
3.13
3.01
15.00
16.30
16.00
17.50
4.10
4.00
4.10
4.00
4.05
4.25
4.85
4.65
1.30
1.20
1.30
1.20
The expected life of the share options is based on historical data and is not necessarily
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.
FRS 102.47.a.ii
In this illustration, all the share-based payment transactions are equity-settled. If an entity has
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 counterpartys
right to cash or other assets had vested by the end of the period (e.g., vested share
appreciation rights).
FRS 102.45.a
The expense recognised in profit or loss granted under the Share Appreciation Rights Plan
during the financial year is $XXX (2013: $XXX).
FRS 102.51.a
The carrying amount of the liability recognised in the Groups and the Companys balance
sheets relating to such share options at 31 December 2014 is $XXX (2013: $XXX).
FRS 102.51.b.i
No Share Appreciation Rights granted under this plan had vested at the end of the
reporting period (2013: nil).
FRS 102.51.b.ii
If options were exercised on a regular basis throughout the period, an entity may instead
disclose the weighted average share price during the period.
FRS 102.45.c
If the range of exercise prices is wide, the outstanding options shall be divided into ranges that
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.
FRS 102.45.d
FRS 24.18
FRS 24.19
2014
2013
$000
$000
700
890
50
30
225
135
1,058
1,200
140
106
25
18
50
60
- Associates
80
76
- A fellow subsidiary
98
92
- Associates
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
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).
FRS 24.18
CA 201.8
- 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).
FRS 24.18.b
FRS 24.17
Group
2014
2013
$000
$000
4,938
4,352
355
357
25
80
80
60
5,398
4,849
3,470
3,119
1,928
1,730
5,398
4,849
FRS 24.18
Commentary:
Related party transactions
An entity should make disclosures for transactions with related parties separately for each of
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.
The following are examples of transactions that are disclosed if they are with a related party:
FRS 24.21
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Items of a similar nature may be disclosed in aggregate except when separate disclosure is
necessary for an understanding of the effects of related party transactions on the financial
statements of the entity.
FRS 24.24
Key management personnel are those persons having authority and responsibility for planning,
directing and controlling the activities of the entity, directly or indirectly, including any director
(whether executive or otherwise) of that entity.
FRS 24.9
In this illustration, the Group does not have any transactions and outstanding balances,
including commitments with key management personnel, close family members of key
management personnel and entities which the key management personnel have control or joint
control.
Illustrative disclosure when the Group have such transactions are as follows:
The transactions and outstanding balances related to key management personnel, close
family members of key management personnel and entities in which the key management
personnel have control or joint control were as follows:
Related parties
Transactions
Legal fees
Purchase of office
stationeries
(a)
(b)
Group
Transactions during
Outstanding
the year
balances as at 31
December
2014
2013
2014
2013
$000
$000
$000
$000
XXX
XXX
XXX
XXX
XXX
FRS 24.18.a,b
(a) The Group uses the legal services provided by Mrs. May Lim who is a close family member
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.
FRS 24.18.b
Company
2014
$000
2013
$000
2014
$000
2013
$000
1,690
550
90
55
63
168
1,753
718
90
55
FRS 16.74.c
FRS 112.23.a
FRS 40.75.h
FRS 17.35.d
FRS 17.35.c
Future minimum rental payable under non-cancellable operating leases (excluding land
use rights) at the end of the reporting period are as follows:
FRS 17.35.a
Group
2014
$000
2013
$000
370
352
Later than one year but not later than five years
800
926
115
126
1,285
1,404
2013
$000
492
440
Later than one year but not later than five years
1,968
1,760
1,400
1,110
3,860
3,310
FRS 17.56.c
FRS 17.56.a
An entity shall disclose total commitments it has made but not recognised at the reporting date
(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.
FRS 112.B18
Unrecognised commitments that may give rise to a future outflow of cash or other resources
include:
FRS 112.B19
(a) unrecognised commitments to contribute funding or resources as a result of, for example:
i.
The disclosure of future minimum lease payments according to time bands relates only to noncancellable 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.
FRS 17.4
FRS 17.31.e
Future minimum lease payments under finance leases together with the present value
of the net minimum lease payments are as follows:
FRS 17.31.b
Group
2014
2013
$000
$000
Present
value of
payments
(Note 30)
Minimum
lease
payments
Present
value of
payments
(Note 30)
251
216
30
16
392
252
265
120
643
468
117
40
1,286
936
412
176
(350)
936
936
Minimum
lease
payments
(236)
176
176
Contingencies
FRS 37.86
a) Contingent liabilities
Legal claim
On 30 November 2014, a customer has commenced an action against the Group in
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.
FRS 11.45
Guarantees
The Group has provided the following guarantees at the end of the reporting period:
FRS 24.20.h
FRS 112.23.b
It has guaranteed its interest in its share of the joint ventures loan of $245,000
(2013: $240,000) (Note 30).
FRS 112.23.b
It has guaranteed to an unrelated party the performance of a contract for the joint
venture. No liability is expected to arise (2013: nil).
FRS 112.23.b
The Company has provided a corporate guarantee to a bank for a $5,400,000 (2013:
$5,400,000) loan (Note 30) taken by a subsidiary.
FRS 112.23.b
FRS 24.20.h
b) Contingent asset
a)
A legal claim for defamation of $500,000 was lodged against one of the Groups
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
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.
FRS 37.89
FRS 11.45
FRS 113.72
FRS 113.76
Level 2 Inputs other that quoted prices included within Level 1 that are observable
for the asset or liability, either directly or indirectly, and
Fair value measurements that use inputs of different hierarchy levels are categorised in
its entirety in the same level of the fair value hierarchy as the lowest level input that is
significant to the entire measurement.
FRS 113.81
FRS 113.86
FRS 113.73
Commentary:
An entity shall disclose information that helps users of its financial statements assess both of
the following:
FRS 113.91
(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:
(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 and 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 FRS 113 and other FRSs are insufficient to meet
the objectives above, an entity shall disclose additional information necessary to meet those
objectives.
FRS 113.92
Significant
observable
inputs other
than quoted
prices
Significant
unobservable
inputs
(Level 1)
(Level 2)
(Level 3)
Total
1,512
1,512
1,746
1,746
139
139
1,563
1,563
150
150
Debt securities
Unquoted debt securities
Derivatives
Forward currency contracts
Interest rate swap
Financial assets as at 31 December 2014
20
20
3,258
170
1,702
5,130
Non-financial assets:
Investment properties
Commercial
2,831
2,831
Residential
1,814
1,814
Freehold land
11,874
11,874
Buildings
3,291
3,291
199
199
1,814
18,195
20,009
(22)
(22)
(685)
(685)
(22)
(685)
(707)
*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.
FRS 113.93.a
and b
Group
2013
$000
Fair value measurements at the end of the reporting period using
Quoted prices
in active
markets for
identical
instruments
Significant
observable
inputs other
than quoted
prices
Significant
unobservable
inputs
(Level 1)
(Level 2)
(Level 3)
Total
1,260
1,260
848
848
28
28
980
980
60
60
45
45
2,108
105
1,008
3,221
2,380
2,380
Residential
1,575
1,575
Freehold land
10,726
10,726
Buildings
3,574
3,574
1,575
16,680
18,255
Fair Value
as at 31
December
2014
Valuation
techniques
Unobservable inputs
Range (weighted
average)
Unquoted debt
securities
Contingent
consideration for
business combination
139
Cost of equity
6% to 11% (7.3%)
Dividend yield
3% to 7.5% (4.6%)
5% to 20% (4.6%)
Probability of default
5% to 50% (10%)
Loss severity
Probability of meeting
contractual earnings
target
6% to 10% (8%)
Market
comparable
approach
11,874
Market
comparable
approach
3,291
Market
comparable
approach
199
Discounted
cash flow
6% to 12% (10.1%)
3% to 5.5% (4.2%)
Long-term pre-tax
operating margin
5% to 20% (10%)
1,563
(685)
Discounted
cash flow
Discounted
cash flow
Discounted
cash flow
Investment properties
Commercial
2,831
Buildings
*The yield adjustments are made for any difference in the nature, location or condition of
the specific property.
FRS 113.93.d
Fair Value
as at 31
December
2013
Valuation
techniques
Unobservable inputs
FRS 113.93.d
Range (weighted
average)
Unquoted debt
securities
28
980
Discounted
cash flow
Discounted
cash flow
Cost of equity
6% to 11% (7.3%)
Dividend yield
3% to 7.5% (4.6%)
5% to 20% (4.6%)
Probability of default
5% to 50% (10%)
Loss severity
Investment properties
Commercial
2,380
Market
comparable
approach
10,726
Market
comparable
approach
3,574
Market
comparable
approach
Buildings
*The yield adjustments are made for any difference in the nature, location or condition of
the specific property.
FRS 113.93.h.i
Profit or loss
Other
comprehensive
income
$000
$000
$000
139
15
1,563
56
(685)
35
31 December 2013
Effect of reasonably possible
alternative assumptions
Carrying
amount
Profit or loss
Other
comprehensive
income
$000
$000
$000
28
10
980
18
For unquoted equity securities, the Group adjusted the discount for lack of
marketability by increasing and decreasing the assumptions by 5% to 8% (2013:
6% to 9%) depending on the individual characteristics of the instrument.
For unquoted debt securities, the Group adjusted the probability of default and
loss severity assumptions used to calculate the credit valuation adjustment. The
adjustments made were to increase and decrease the assumptions by 6% (2013:
5%), which is within the range based on the Groups internal credit risk assessment
for the counterparties.
For contingent consideration for business combination, the Group adjusted the
probability of meeting the contractual earnings target by increasing and
decreasing assumption by 10% (2013: 10%).
FRS 113.93.h.ii
FRS 113.93.e
Investment
properties
Contingent
consideration
Total
Unquoted
debt
securities
Commercial
28
980
2,380
3,388
350
(235)
115
FRS 113.93.e.i
42
28
70
FRS 113.93.e.ii
103
(34)
576
(21)
400
-
1,079
(55)
FRS 113.93.e.iii
(300)
1
(300)
1
FRS 113.93.e.iv
(450)
(450)
139
1,563
2,831
(685)
3,848
Group
2013
$000
Fair value measurements using significant unobservable inputs (Level 3)
Opening balance
Total gains or losses for
the period
Included in profit or loss
Included in other
comprehensive income
Purchases, issues, sales
and settlements
Purchases
Sales
Closing balance
Investment
properties
Unquoted equity
securities
Commercial
Unquoted
debt
securities
Total
40
1,026
2,330
3,396
50
50
FRS 113.93.e.i
15
24
FRS 113.93.e.ii
16
(43)
15
(70)
31
(113)
FRS 113.93.e.iii
28
980
2,380
3,388
Group
2014
$000
Fair value measurements using significant unobservable inputs (Level 3)
Available-for-sale financial
assets
Unquoted
equity
securities
Unquoted
debt
securities
Buildings
Investment
properties
Contingent
consideration
Total
Commercial
FRS 113.93.e.i
350
350
(235)
(235)
- Other expenses
Fair value
adjustment
of contingent
consideration
of business
combination
(ii)
Other
comprehensive
income:
- Net gain on fair
value changes
of available-forsale financial
assets
- Net surplus on
revaluation of
land and
buildings
FRS 113.93.e.ii
42
28
70
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
financial assets
Unquoted
equity
securities
Unquoted
debt
securities
Freehold
land
Investment
properties
Buildings
Contingent
consideration
Total
Commercial
(i)
FRS 113.93.e.i
50
50
FRS 113.93.e.ii
15
24
1,784
620
2,404
Relates to net gain from fair value adjustment of investment properties held as at 31 December
2013.
FRS 113.93.g
The Groups Chief Financial Officer (CFO), who is assisted by the Head of Treasury
and senior controller (collectively referred to as the CFO office) oversees the
Groups financial reporting valuation process and is responsible for setting and
documenting the Groups valuation policies and procedures. In this regard, the CFO
office reports to the Groups Audit Committee.
For all significant financial reporting valuations using valuation models and significant
unobservable inputs, it is the Groups 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.
Group
2014
$000
Fair value measurements at the end of the reporting period using
Quoted
prices in
active
markets
for
identical
assets
(Level 1)
Significant
observable
inputs other
than quoted
prices
(Level 2)
Significant
unobservable
inputs
(Level 3)
Carrying
amount
Total
Assets
Government bonds
675
675
660
Investment in associates
10,600
10,600
10,595
60
60
63
(205)
(205)
(200)
Financial guarantees
(29)
(29)
(26)
(4,983)
(4,983)
(4,890)
- Convertible redeemable
preference shares
(509)
(509)
(450)
Liabilities:
Company
Assets
Amounts and loans due from
subsidiaries
13,432
13,432
13,563
49
49
51
(85)
(85)
(80)
(3,162)
(3,162)
(3,100)
- Convertible redeemable
preference shares
(509)
(509)
(450)
Liabilities:
Financial guarantees
Loans and borrowings (noncurrent)
FRS 113.97
FRS 107.25
FRS 113.97
FRS 107.25
Group
2013
$000
Fair value measurements at the end of the reporting period using
Quoted
prices in
active
markets
for
identical
assets
(Level 1)
Significant
observable
inputs other
than quoted
prices
(Level 2)
Significant
unobservable
inputs
(Level 3)
Carrying
amount
Total
Assets
Government bonds
665
665
650
Investment in associates
10,400
10,400
10,321
45
45
48
(11)
(11)
(8)
(5,342)
(5,342)
(5,240)
- Convertible redeemable
preference shares
(459)
(459)
(428)
Liabilities:
Financial guarantees
Loans and borrowings (noncurrent)
Company
Assets
Amounts and loans due from
subsidiaries
14,161
14,161
14,635
34
34
36
(105)
(105)
(100)
(3,060)
(3,060)
(3,000)
- Convertible redeemable
preference shares
(459)
(459)
(428)
Liabilities:
Financial guarantees
Loans and borrowings (noncurrent)
FRS 113.97
FRS 113.93.d
Company
2014
2013
2014
2013
$000
$000
$000
$000
Carrying
amount
Fair
value
Carrying
amount
Fair
value
Carrying
amount
Fair
value
Carrying
amount
Fair
value
Financial assets:
Government bonds
22
660
675
650
665
Equity securities, at
cost
22
500
600
21
13,972
13,432
14,635
14,161
21
63
60
48
45
51
49
36
34
Financial liabilities:
Deferred cash
settlement
31
(200)
(205)
Financial guarantee
32
(26)
(29)
(8)
(11)
30
(720)
(769)
(160)
(169)
(4,890)
(4,983)
(5,240)
(5,342)
(3,100)
(3,162)
(3,000)
(3,060)
(450)
(509)
(428)
(459)
(450)
(509)
(428)
(459)
- Obligations under
finance leases
- Fixed rate bank
loans and bonds
- Convertible
redeemable
preference shares
(80)
(85)
(100)
(105)
Fair value information has not been disclosed for the Groups investments in equity
securities that are carried at cost because fair value cannot be measured reliably.
These equity securities represent ordinary shares in an Israeli high-technology
company that is not quoted on any market and does not have any comparable industry
peer that is listed. In addition, the variability in the range of reasonable fair value
estimates derived from valuation techniques is significant. The Group does not intend
to dispose of this investment in the foreseeable future. The Group intends to eventually
dispose of this investment through sale to institutional investors.
FRS 107.30.a-d
FRS 113.99
FRS 113.94
(a) The nature, characteristics and risks of the asset or liability; and
(b) The level of the fair value hierarchy within which the fair value measurement is
categorised.
The number of classes may need to be greater for fair value measurements categorised
within Level 3 of the fair value hierarchy because those measurements have a greater
degree of uncertainty and subjectivity. Determining appropriate classes of assets and
liabilities for which disclosures about fair value measurements should be provided
requires judgement. A class of assets and liabilities will often require greater
disaggregation than the line items presented in the balance sheet. If another FRS
specifies the class for an asset or a liability, an entity may use that class in providing the
disclosures required in FRS 113 if that class meets the requirements in this paragraph.
In this illustration, the current use of the non-financial assets does not differ from their highest
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.
In this illustration, the Groups 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.
FRS 113.93.i
In this illustration, the Groups 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.
In this illustration, the Group does not have any liability measured at fair value and issued with
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.
FRS 113.98
FRS 113.93.c
In this illustration, there were no assets or liabilities transferred between Level 1 and Level 2.
Illustrative disclosure if an entity has transfers of assets or liabilities between Level 1 and
Level 2.
The following table shows transfers from Level 1 to Level 2 of the fair value hierarchy
for assets and liabilities which are recorded at fair value.
Group
2013
$000
Financial assets held-for-trading
- Quoted equity securities
Financial investments available-for-sale
- Other debt securities
XXX
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.
Transfers into or out of Level 3
FRS 113 requires disclosures of the amount of any transfers into or out of Level 3 of the fair
value hierarchy, the reasons for those transfers and the entitys policy for determining when
transfers between levels are deemed to have occurred. Transfers into Level 3 shall be
disclosed and discussed separately from transfers out of Level 3.
In this illustration, there were no assets or liabilities transferred from Level 1 and Level 2 to
Level 3.
Illustrative disclosure if there were transfers of assets or liabilities into Level 3.
During the financial year ended 31 December 2014, the Group transferred certain
financial instruments from Level 2 to Level 3 of the fair value hierarchy. The carrying
amount of the total financial assets transferred was $XXX.
The reason for the transfers from Level 2 to Level 3 is that inputs to the valuation
models for the other debt securities ceased to be observable. Prior to transfer, the fair
value of the instruments was determined using observable market transactions or
binding broker quotes for the same or similar instruments. Since the transfer, these
instruments have been valued using valuation models incorporating significant non
market-observable inputs.
Illustrative disclosure if there were transfers of assets or liabilities out of Level 3.
The Group transferred an unquoted equity security from Level 3 to Level 1 of the fair
value hierarchy. The carrying amount of the total financial assets transferred was
$XXX.
The security was transferred from Level 3 into Level 1 as it was listed on the stock
exchange during the financial year. Prior to the transfer, the fair value of the security
was determined using valuation model incorporating significant non market-observable
inputs. Since the transfer, the fair value of the security is determined based on market
price quoted in the stock exchange.
FRS 113.93.e.iv
In this illustration, there has been no change in valuation technique for recurring and nonrecurring 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
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:
(a)
FRS 113.93.d
FRS 113.93.g
FRS 113.IE65
for the group within the entity that decides the entitys valuation policies and
procedures:
i.
its description;
ii.
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
requires the disclosures of
FRS 113.97
the level of the fair value hierarchy within which the fair value measurements are
categorised in their entirety (Level 1, 2 or 3),
FRS 113.93.b
a description of the valuation technique(s) and inputs used in the fair value measurement.
If there has been a change in valuation technique, the entity shall disclose the reason for
making it,
FRS 113.93.d
- the fact and why the non-financial asset is being used in a manner that differs from its
highest and best use if the highest and best use of a non-financial asset differs from its
current use
FRS 113.93.i
FRS 107.25 requires the fair value of each class of financial assets and liabilities to be
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.
Financial instruments whose fair value cannot be reliably measured
FRS 107 requires the disclosure of fair value information for financial instruments whose fair
value cannot be reliably measured to include disclosure of whether and how the entity intends
to dispose of such financial instruments.
FRS 107.20.d
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.
FRS 107.30.e
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, liquidity risk,
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 Groups policy that no trading in derivatives for speculative purposes shall be
undertaken.
FRS 107.31-33
and IG15
The following sections provide details regarding the Groups and Companys exposure to
the above-mentioned financial risks and the objectives, policies and processes for the
management of these risks.
Commentary:
Alternative simplified disclosures
In this illustration, the entity is exposed to all credit risk, liquidity risk, interest rate risk, foreign
currency risk and market price risk.
FRS 107.31, 33
and IG17
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.
Nature and extent of risks arising from financial instruments
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
entitys 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
according to the specific circumstances, financial risk exposures, and risk management
policies and procedures relevant to the entity.
FRS 107.AGB6
Decentralised disclosures
FRS 107.33.c
In this illustration, most of the information regarding the nature and extent of risks arising
from financial instruments required by FRS 107.31-42, has been disclosed in one centralised
note. Alternatively, an entity may disclose such information in the respective balance sheet
item notes where appropriate.
In this illustration, theres no change to the Groups 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.
a) Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should
a counterparty default on its obligations. The Groups and the Companys exposure to
credit risk arises primarily from trade and other receivables. For other financial assets
(including investment securities, cash and short-term deposits and derivatives), the
Group and the Company minimise credit risk by dealing exclusively with high credit
rating counterparties.
The Groups objective is to seek continual revenue growth while minimising losses
incurred due to increased credit risk exposure. The Group trades only with recognised
and creditworthy third parties. It is the Groups policy that all customers who wish to
trade on credit terms are subject to credit verification procedures. In addition,
receivable balances are monitored on an ongoing basis with the result that the Groups
exposure to bad debts is not significant. For transactions that do not occur in the
country of the relevant operating unit, the Group does not offer credit terms without
the approval of the Head of Credit Control.
Excessive risk concentration
Concentrations arise when a number of counterparties are engaged in similar business
activities, or activities in the same geographical region, or have economic features that
would cause their ability to meet contractual obligations to be similarly affected by
changes in economic, political or other conditions. Concentrations indicate the relative
sensitivity of the Groups performance to developments affecting a particular industry.
FRS 107.33.a-b
FRS 107.IG15.c
In order to avoid excessive concentrations of risk, the Groups policies and procedures
include specific guidelines to focus on maintaining a diversified portfolio. Identified
concentrations of credit risks are controlled and managed accordingly. Selective
hedging is used within the Group to manage risk concentrations at both the relationship
and industry levels. The Group does not apply hedge accounting.
Exposure to credit risk
At the end of the reporting period, the Groups and the Companys maximum exposure
to credit risk is represented by:
-
Information regarding credit enhancements for trade and other receivables is disclosed
in Note 21.
FRS 107.36.b
FRS 107.34.a
and AGB8
Group
2014
2013
$000
% of total
$000
% of total
10,019
46%
12,950
53%
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%
Multi-industry conglomerates
8,590
39%
9,989
41%
Electronics
7,539
35%
7,496
31%
Property
4,719
22%
5,883
24%
846
4%
823
4%
21,694
100%
24,191
100%
By country:
Singapore
By industry sectors:
Others
21% (2013: 19%) of the Groups trade receivables were due from 5 major
customers who are multi-industry conglomerates located in Singapore.
11% (2013: 9%) of the Groups trade and other receivables were due from related
parties while almost all of the Companys receivables were balances with related
parties.
FRS 107.34.a,
34.c and AGB8
FRS 107.36.c
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).
In this illustration, no financial instrument has been designated as financial assets or financial
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 liabilitys carrying amount and the contractual repayment
amount.
FRS 107.9-11
For financial instruments where the carrying amount best represents the maximum exposure
to credit risk, the disclosure of the maximum exposure to credit risk is not required.
FRS 107.36.a
Quantitative disclosures
FRS 107 requires the disclosure of summary quantitative data about an entitys exposure to
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.
FRS 107.34.a
In addition, if the above-mentioned quantitative data disclosed as at the end of the reporting
period are unrepresentative of the entitys 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.
The identification of concentrations of credit risk requires judgement taking into account the
circumstances of the entity. Apart from country and industry sectors, other measures of
credit risk concentrations may include credit rating or other measures of credit quality, limited
number of individual counterparties, or groups of closely related counterparties.
FRS 107.33.a-b,
39.c and IG5
The Groups and the Companys liquidity risk management policy is that not more than
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
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 Groups 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 Companys loans and borrowings will mature in
less than one year at the end of the reporting period.
The Group assessed the concentration of risk with respect to refinancing its debt and
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.
FRS 107.AGB11F.a
and c
Group
2014
2013
$000
$000
One to
One year or five
Over five
less
years
years
Total
Total
Financial assets:
Trade and other
receivables
Cash and short-term
deposits
Derivatives
Total undiscounted
financial assets
24,921
2,984
27,905
26,936
2,980
29,916
6,117
6,117
4,858
4,858
170
170
105
105
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
1,189
12,817
4,275
18,281
2,290
12,659
3,277
18,226
685
685
22
22
22,387
13,067
4,275
39,729
24,009
12,659
3,277
39,945
(9,679)
(3,277)
(5,066)
Contingent consideration
for business combination
Derivatives
Total undiscounted
financial liabilities
Total net undiscounted
financial assets/
(liabilities)
8,821
(10,083) (4,275)
(5,537)
7,890
Company
2014
2013
$000
$000
Total
Total
Financial assets:
Trade and other
receivables
Cash and short-term
deposits
338
17,289
4,621
Total undiscounted
financial assets
4,959
17,289
470
Other liabilities
481
17,627
350
17,855
18,205
4,621
4,145
4,145
22,248
4,495
17,855
22,350
470
414
414
481
446
446
4,682
2,084
6,766
3,796
2,540
6,336
951
4,682
2,084
7,717
860
3,796
2,540
7,196
4,008
12,607
(2,084)
14,531
3,635
14,059
(2,540)
15,154
Financial liabilities:
The table below shows the contractual expiry by maturity of the Group and Companys
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
less
years
years
Total
Total
Group
Financial guarantees
320
245
565
15
240
255
5,400
5,400
5,400
5,400
Company
Financial guarantees
FRS 107.AGB11C.c
The application guidance in FRS 107 illustrates the other factors that an entity might also
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)
(c)
(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 entitys 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)
FRS 107.AGB11F
In this illustration, certain undiscounted payments presented differ from the carrying amount
included in the balance sheet because the balance sheet amounts are based on discounted
cash flows.
FRS 107.AGB11D
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
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.
FRS 107.AGB11
FRS 107.39.c requires an entity to describe how it manages the liquidity risk inherent in the
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.AGB11E
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,
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
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:
FRS 107.AGB11B
FRS 107.AGB11D
Group
$000
One year One to Over five
or less five years years
Total
Derivatives:
- Interest rate swaps settled net
XXX
XXX
XXX
XXX
(XXX)
(XXX)
FRS 107 requires issued financial guarantee contracts to be recorded in the contractual
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.
FRS 107.AGB11C.c
FRS 107.33.a- b
and IG16
The Groups policy is to manage interest cost using a mix of fixed and floating rate
debts. The Groups 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
Groups borrowings are at fixed rates of interest.
FRS 107.33.b
and 34.a
FRS 107.40,
IG36 and AGB18
Interest rate risk arises on interest-bearing financial instruments recognised in the balance
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).
FRS 107.AGB22
Quantitative disclosures
FRS 107 requires disclosure of sensitivity analysis for each type of market risk to which an
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 entitys business. However, an entity may
also drill down to provide different types of sensitivity analysis for different classes of
financial instruments.
FRS 107.40.a
The sensitivity analysis should be based on changes in the risk variable that were reasonably
possible at the reporting date having considered the economic environments in which the
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
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
analysis that reflects interdependencies between risk variables, such as a value-at-risk
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
instrument (e.g., because the end of the reporting period exposure does not reflect exposure
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
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.
FRS 107.34.b
FRS 107.AGB21
In this illustration, the interest rate risk sensitivity analysis has been performed for the effect of
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 Groups profit before tax (through the
impact on interest expense on floating rate loans and borrowings) and the Groups equity
(through the impact on other reserves for fixed rate debt securities classified as availablefor-sale).
Group
$000
Increase/
decrease in
basis points
Effect on profit
before tax
Effect on
equity
- Singapore dollar
+15
(XX)
(XX)
- US dollar
+20
(XX)
(XX)
- Singapore dollar
-10
XX
XX
- US dollar
-15
XX
XX
- Singapore dollar
+15
(XX)
(XX)
- US dollar
+20
(XX)
(XX)
- Singapore dollar
-10
XX
XX
- US dollar
-15
XX
XX
2014
2013
FRS 107.IG34
FRS 107.33.a
and 34.a
The Group and the Company also hold cash and short-term deposits denominated in
foreign currencies for working capital purposes. At the end of the reporting period,
such foreign currency balances are mainly in USD.
FRS 107.33.a
and 34.a
The Group requires all of its operating entities to use forward currency contracts to
eliminate the currency exposures on any individual transactions in excess of $100,000
for which payment is anticipated more than one month after the Group has entered
into a firm commitment for a sale or purchase. The forward currency contracts must be
in the same currency as the hedged item. It is the Groups policy not to enter into
forward contracts until a firm commitment is in place. It is the Groups policy to
negotiate the terms of the forward currency contracts to match the terms of the firm
commitment to maximise hedge effectiveness.
At 31 December 2014, the Group had hedged 75% (2013: 68%) and 70% (2013: 65%)
of its foreign currency denominated sales and purchases respectively, for which firm
commitments existed at the end of the reporting period, extending to March 2015
(2013: March 2014). The Group does not apply hedge accounting for such foreign
currency denominated sales and purchases.
FRS 107.33.b
FRS 107.34.a
The Group is also exposed to currency translation risk arising from its net
investments in foreign operations, including Malaysia, Peoples Republic of China (PRC)
and Vietnam. The Groups investment in its Vietnam subsidiary is hedged by a USD
denominated bank loan, which mitigates structural currency exposure arising from the
subsidiarys net assets. The Groups net investments in Malaysia and PRC are not
hedged as currency positions in Ringgit and RMB are considered to be long-term in
nature.
Sensitivity analysis for foreign currency risk
The following table demonstrates the sensitivity of the Groups profit before tax 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
USD/SGD
USD/RMB
RMB/SGD
2014
2013
$000
$000
30
30
+28
+28
15
12
+15
+12
+57
+66
57
66
+40
+68
40
68
The disclosure of exposures to foreign currency amounts is required under the disclosure
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
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 Groups 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
USD/RMB
RMB/SGD
Ringgit/SGD
XX
+XX
XX
+XX
XX
+XX
XX
+XX
XX
+XX
XX
+XX
XX
+XX
XX
+XX
XX
+XX
XX
+XX
XX
+XX
XX
+XX
XX
+XX
XX
+XX
XX
+XX
XX
+XX
FRS 107.33.a
FRS 107.33.b
and 34.a
Commentary:
Quantitative disclosures
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.
FRS 107.40,
AGB17-18 and
AGB25-27
FRS 1.134
Capital includes debt and equity items as disclosed in the table below.
FRS 1.135.a.i
The primary objective of the Groups capital management is to ensure that it maintains a
strong credit rating and healthy capital ratios in order to support its business and
maximise shareholder value.
FRS 1.135.a
The Group manages its capital structure and makes adjustments to it, in light of changes
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
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.
The Group monitors capital using a gearing ratio, which is net debt divided by total capital
plus net debt. The Groups 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.
Group
2014
2013
$000
14,604
15,478
17,717
19,140
Net debt
Convertible redeemable preference shares
Equity attributable to the owners of the Company
Less:
(450)
(428)
(6,117)
(4,858)
25,754
29,332
450
428
72,669
66,927
(672)
(436)
(903)
(740)
Total capital
71,544
66,179
97,298
95,551
26%
31%
Gearing ratio
FRS 1.135.a
FRS 1.135.b
$000
Less:
FRS 1 requires the disclosure of information (as provided to key management personnel) that
enables users of financial statements to evaluate the entitys objectives, policies and processes
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
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 users understanding of an entitys
capital resources, the entity shall disclose separate information for each capital requirement to
which the entity is subject to.
FRS 1.136
In this illustration, it is assumed that the externally imposed capital requirement has been
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.
FRS 1.135.e
For management purposes, the Group is organised into business units based on their
products and services, and has four reportable segments as follows:
FRS 108.22
FRS 108.12
FRS 108.27
Transfer prices between operating segments are on an arms length basis in a manner
similar to transactions with third parties.
FRS 108.27.a
FRS 108.28.b
Electronic
components
Property
Fire prevention
equipment and
services
(Discontinued
operation)
Corporate
Adjustments and
eliminations
Notes
Per consolidated
financial
statements
FRS 108.20,21.b
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
$000
$000
$000
$000
$000
$000
$000
$000
$000
$000
$000
$000
105,292
103,965
31,428
38,606
13,152
14,598
(13,152)
(14,598)
136,720
142,571
FRS 108.23.a
and 32
Inter-segment
265
120
(265)
(120)
FRS 108.23.b
Total revenue
105,292
103,965
31,428
38,606
265
120
13,152
14,598
(13,417)
(14,718)
136,720
142,571
Interest income
430
327
430
327
FRS 108.23.c
Dividend income
526
406
526
406
FRS 108.23.f
489
129
489
129
FRS 108.23.f
2,188
2,092
925
883
150
115
150
125
3,263
3,090
FRS 108.23.e
151
128
151
128
FRS 108.23.g
94
657
234
500
650
FRS 108.23.g
FRS 36.129.a
FRS 108.23.f
Revenue:
External customers
Results:
(125)
(650)
1,121
754
107
95
310
218
Segment profit/(loss)
6,035
5,698
2,001
2,635
452
438
1,674
1,523
(193)
(551)
(150)
(880)
(1,462)
657
328
500
1,538
1,067
FRS 108.23.i
7,057
7,116
FRS 108.23
1,674
1,523
FRS 108.24.a
Assets:
Investment in joint ventures
Investment in associates
566
10,595
9,755
10,595
10,321
FRS 108.24.a
8,134
2,872
2,803
1,560
758
221
11,695
4,653
FRS 108.24.b
Segment assets
76,689
73,426
20,449
19,200
12,450
11,960
2,270
2,450
12,489
12,128
124,347
119,164
FRS 108.23
Segment liabilities
16,076
15,748
10,383
8,152
1,314
1,189
1,043
1,130
20,779
24,096
49,595
50,315
FRS 108.23
Notes
The amounts relating to the fire prevention equipment and services segment
has been excluded to arrive at amounts shown in profit or loss as they are
presented separately in the statement of comprehensive income within one line
item, loss from discontinued operation, net of tax.
Other non-cash expenses consist of amortisation of land use rights, sharebased payments, inventories written-down, provisions, and impairment of
financial assets as presented in the respective notes to the financial
statements.
FRS 108.28.e
The following items are added to/(deducted from) segment profit to arrive at
profit before tax from continuing operations presented in the consolidated
income statement:
FRS 108.28.b
2014
2013
$000
551
151
657
(105)
(1,715)
$000
193
128
328
(50)
(1,512)
(419)
(549)
(880)
(1,462)
The following items are added to/(deducted from) segment assets to arrive at
total assets reported in the consolidated balance sheet:
2014
2013
$000
$000
1,674
10,595
470
(250)
1,523
10,321
463
(179)
12,489
12,128
The following items are added to/(deducted from) segment liabilities to arrive
at total liabilities reported in the consolidated balance sheet:
2014
Deferred tax liabilities
Income tax payable
Loans and borrowings (including discontinued operation)
Inter-segment liabilities
FRS 108.28.a
FRS 108.21.c
2013
$000
$000
2,378
2,927
15,604
1,926
6,734
15,478
(25)
20,779
(20)
24,069
FRS 108.28.c
FRS 108.28.d
Non-current assets
2014
2013
2014
2013
$000
$000
$000
$000
Singapore
76,432
86,464
20,570
19,346
32,970
33,005
15,896
15,591
Malaysia
20,990
20,440
5,061
4,138
3,010
19,480
17,260
3,082
(13,152)
(14,598)
(1,016)
136,720
142,571
43,593
42,085
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:
Information about segment profit or loss
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
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 entitys 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.
FRS 108.23
FRS 108 does not provide specific disclosure requirements for an operating segment classified as
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.
FRS 108.13
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
An entity shall report interest revenue separately from interest expense for each reportable
segment unless a majority of the segments 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
segments interest revenue net of its interest expense and disclose that it has done so.
FRS 108.23
Disclosure of operating segment assets and liabilities are required only where such measures are
provided to the CODM.
FRS 108.23
Explanation of measurements of segment profit or loss, segment assets and segment liabilities
If not apparent from the disclosures of reconciliations in this note, entities are required to disclose
further information regarding the nature of differences between the measurements of segment
profit or loss, segment assets, segment liabilities, and the entitys 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.
FRS 108.27.b-d
The nature of any changes from prior periods in the measurement methods used to
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.
FRS 108.27.e-f
FRS 108.33
(b) Non-current assets other than financial instruments, deferred tax assets, post-employment
benefit assets, and rights arising under insurance contracts (i) located in the entitys
country of domicile and (ii) located in all foreign countries in total in which the entity holds
assets. If assets in an individual foreign country are material, those assets should be
disclosed separately.
Information about major customers
For the purposes of disclosing information about major customers, a group of entities known to
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.
FRS 108.34
43. Dividends
Group and Company
2014
2013
$000
$000
1,001
1,025
612
557
1,613
1,582
1,008
1,001
FRS 1.137.a,
FRS 10.12
FRS 10.17
Appendix A-1
Illustrating the Statement of Comprehensive Income in one statement with the analysis of
expenses by nature:
2014
$000
2013
$000
136,720
142,571
430
526
1,511
327
406
886
Note
Continuing operations
Revenue
Other items of income
Interest income
Dividend income from investment securities
Other income
Items of expense
Raw materials and consumables used
Changes in inventories of finished goods and work-in-progress
Employee benefits expense
Depreciation and amortisation expense
Impairment losses
Net foreign exchange loss
Finance costs
Other expenses
Share of results of joint venture
Share of results of associates
Profit before tax from continuing operations
Income tax expense
Profit from continuing operations, net of tax
Discontinued operation
Loss from discontinued operation, net of tax
Profit for the year
X
X
(98,607)
(2,203)
(20,502)
(3,113)
(833)
(136)
(1,715)
(5,829)
(92,367)
(16,631)
(19,024)
(2,965)
(425)
(145)
(1,512)
(4,461)
151
657
7,057
(1,557)
5,500
128
328
7,116
(1,687)
5,429
(544)
4,956
(188)
5,241
1,250
62
1,312
2,404
10
2,414
174
(181)
(7)
98
(82)
16
FRS 1.82A.a
FRS 1.82A.a, FRS 16.77.f
FRS 1.82A.a, FRS 28.39
FRS 1.82A.b
FRS 1.82A.b
FRS 1.82A.b, FRS 21.52.b
1,305
2,430
FRS 1.81A.b
6,261
7,671
FRS 1.81A.c
5,320
(544)
4,776
5,029
(188)
4,841
FRS 105.33.d
FRS 105.33.d
FRS 1.81B.a.ii
180
180
400
400
FRS 1.81B.a.i
6,091
170
6,261
7,211
460
7,671
FRS 1.81B.b.ii
FRS 1.81B.b.i
6,585
(494)
6,091
7,379
(168)
7,211
FRS 105.33.d
FRS 105.33.d
X
X
Appendix A-1
Note
2014
$000
2013
$000
X
X
22.98
22.73
21.81
21.58
FRS 33.66
FRS 33.66
X
X
20.63
20.17
21.00
20.53
FRS 33.66
FRS 33.66
Commentary:
Tax effects related to each component of other comprehensive income
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.
FRS 1.82A
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.
Appendix A-2
Hedge accounting
X.
X.X
FRS 107.21
fair value hedges when hedging the exposure to changes in the fair value of a
recognised asset or liability or an unrecognised firm commitment
FRS 39.86.a
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.b
At the inception of a hedging relationship, the Group formally designates and documents
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 instruments fair value in offsetting the exposure to changes in the hedged
items 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.
FRS 39.86.c
FRS 39.88
Hedges which meet the strict criteria for hedge accounting are accounted for as follows:
Fair value hedges
The change in the fair value of a hedging derivative is recognised in profit or loss in
finance costs. The change in the fair value of the hedged item attributable to the risk
hedged is recorded as a part of the carrying value of the hedged item and is also
recognised in profit or loss in finance costs.
FRS 39.89
For fair value hedges relating to items carried at amortised cost, the adjustment to
carrying value is amortised through profit or loss over the remaining term to of the hedge
using the effective interest rate method. Effective interest rate amortisation may begin as
soon as an adjustment exists and no later than when the hedged item ceases to be
adjusted for changes in its fair value attributable to the risk being hedged. If the hedged
item is derecognised, the unamortised fair value is recognised immediately in profit or loss.
FRS 39.92
FRS 39.93
The Group has an interest rate swap that is used as a hedge for the exposure of changes in
the fair value of its X% fixed rate secured loan. See Note X for more details.
Appendix A-2
Hedge accounting
X.
X.X
FRS 39.95
The Group uses forward currency contracts as hedges of its exposure to foreign currency
risk in forecasted transactions and firm commitments, as well as forward commodity
contracts for its exposure to volatility in the commodity prices. The ineffective portion
relating to foreign currency contracts is recognised in finance costs and the ineffective
portion relating to commodity contracts is recognised in other operating income. Refer to
Note X for more details.
Amounts recognised as other comprehensive income are transferred to profit or loss when
the hedged transaction affects profit or loss, such as when the hedged financial income or
financial expense is recognised or when a forecast sale occurs. Where the hedged item is
the cost of a non-financial asset or non-financial liability, the amounts recognised as other
comprehensive income are transferred to the initial carrying amount of the non-financial
asset or liability.
FRS 39.97, 98
and 100
FRS 39.101
FRS 39.102
Appendix A-2
Hedge accounting
Extracts of notes to the financial statements illustrating the disclosures of fair value hedge
accounting:
X.
X.X
Hedging activities
Fair value hedges
At 31 December 2014, the Group had an interest rate swap agreement in place with a
notional amount of USDXXX ($XXX) (2013: nil) whereby the Group receives a fixed rate of
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.
FRS 107.22
FRS 107.24.a
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:
Disclosure requirement regarding fair value hedges
FRS 107 requires separate disclosures of the amount of gain or loss on the hedging instrument
and on the hedged item attributable to the hedged risk in a fair value hedge relationship.
FRS 107.24.a
Appendix A-2
Hedge accounting
Extracts of notes to the financial statements illustrating the disclosures of cash flow hedge
accounting:
X.
X.X
Hedging activities
Cash flow hedges
Foreign currency risk
Foreign currency forward contracts measured at fair value through other comprehensive
income are designated as hedging instruments in cash flow hedges of forecast sales in the
United States and forecast purchases in the United Kingdom. These forecast transactions
are highly probable, and they comprise about 25% of the Groups total expected sales and
about 65% of its total expected purchases.
FRS 107.23.a
While the Group also enter into other foreign exchange forward contracts with the
intention to reduce the foreign exchange risk of expected sales and purchases, these other
contracts are not designated in hedge relationships and are measured at fair value through
profit and loss.
The foreign exchange forward contract balances vary with the level of expected foreign
currency sales and purchases and changes in foreign exchange forward rates.
2014
Group
2013
Assets
Liabilities
Assets
Liabilities
$000
$000
$000
$000
XXX
(XXX)
XXX
(XXX)
The terms of the foreign currency forward contracts have been negotiated for the
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.
FRS 107.24.b
The cash flow hedges of the expected future sales in January 2015 were assessed to be
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.
FRS 107.23.c
The cash flow hedges of the expected future purchases in February and March 2015 were
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.
FRS 107.23.c
At the end of December 2013, the cash flow hedges of the expected future sales in the
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.
FRS 107.23.c
The amount removed from other comprehensive income during the year and included in
the carrying amount of the hedging items as a basis adjustment was immaterial for both
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.
Appendix A-2
Hedge accounting
Extracts of notes to the financial statements illustrating the disclosures of cash flow hedge
accounting:
X.
X.X
Hedging activities
Cash flow hedges (continued)
Commodity price risk
The Group purchases copper on an ongoing basis as its operating activities in the
electronic division require a continuous supply of copper for the production of its
electronic devices. The increased volatility in copper price over the past 12 months has led
to the decision to enter into commodity forward contracts
These contracts, which commenced on 1 July 2014, are expected to reduce the volatility
attributable to price fluctuations of copper. Hedging the price volatility of forecast copper
purchases is in accordance with the risk management strategy outlined by the Board of
Directors. The hedging relationships are for a period between 3 to 12 months based on
existing purchase agreements. The Group designated only the spot-to-spot movement of
the entire commodity purchase price as the hedged risk. The forward points of the
commodity forward contracts are therefore excluded from the hedge designation. Changes
in fair value of the forward points are recognised in profit or loss in Other expenses were
immaterial during the year.
As at 31 December 2014, the fair value of outstanding commodity forward contracts
amounted to a liability of $XXX. The ineffectiveness recognised in Other expenses in
profit or loss for the current year was $XXX (see Note X). The cumulative effective portion
of $XXX is reflected in other comprehensive income and will affect the profit or loss in the
first six months of 2015.
Appendix A-2
Hedge accounting
Extracts of notes to the financial statements illustrating the disclosures of cash flow hedge
accounting: (continued)
X.
X.X
Hedging activities
Cash flow hedges (continued)
Hedging reserve
The cash flow hedge reserve contains the effective portion of the cash flow hedge
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.
X.X
FRS 1.79.b
2013
$000
$000
FRS 1.97
(XXX)
(XXX)
(XXX)
XXX
XXX
(XXX)
XXX
FRS 1.92,
FRS 107.23.d
Commentary:
Disclosure requirements regarding cash flow hedges
Where applicable, FRS 107 requires the disclosure of the ineffectiveness recognised in profit or
loss that arises from cash flow hedges.
FRS 107.24.b
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.
FRS 107.23.d
Appendix A-2
Hedge accounting
Extracts of notes to the financial statements illustrating the disclosures of hedge of net
investments in foreign operations:
X.
X.X
Hedging activities
Hedge of net investments in foreign operations
Included in loans at 31 December 2014 was a borrowing of USDXXX which has been
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 Groups 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.
X.X
X.X
FRS 107.22
FRS 1.79.b
2014
2013
$000
$000
XXX
(XXX)
FRS 1.97
Commentary:
Disclosure requirement regarding hedges of net investments in foreign operations
Where applicable, FRS 107 requires the disclosure of the ineffectiveness recognised in profit or
loss that arises from hedges of net investments in foreign operations.
FRS 107.24.c
Appendix A-3
X.
X.X
FRS 18.14
a)
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)
ii)
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
is recognised as work progresses.
In Singapore context, INT FRS 115 includes an accompanying note on the
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
based on the costs incurred up until the end of the reporting periods as a proportion of
total costs expected to be incurred.
FRS 18.14
Commentary:
Stage of completion
The stage of completion of a contract may be determined in a variety of ways. The entity 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.
Appendix A-3
X.
X.X
FRS 1.125
Extract of notes to financial statements illustrating the disclosure of revenue from sale of
development property:
X.
Revenue
Group
2014
2013
$000
$000
XXX
XXX
FRS 18.35.b.i
XXX
XXX
FRS 18.35.b.i,
INT FRS 115.20.b
Appendix A-3
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
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
XXX
XXX
XXX
XXX
Group
2014
2013
$000
$000
At 1 January
XXX
XXX
XXX
XXX
FRS 11.40(a)
Interest capitalised
XXX
XXX
FRS 23.26(a)
XXX
XXX
FRS 40.57(d)
(XXX)
At 31 December
(XXX)
(XXX)
Appendix A-3
X.
Development property
The following table provides information about such continuous transfer agreements that are
in progress at the reporting date:
Group
2014
2013
$000
$000
XXX
XXX
XXX
XXX
Advances received
XXX
XXX
Appendix A-4
X.
X.X
FRS 19.8
FRS 19.67
FRS 19.120
Service cost
Service costs which include current service costs, past service costs and gains or losses on
non-routine settlements are recognised as expense in profit or loss. Past service costs are
recognised when plan amendment or curtailment occurs.
Net interest on the net defined benefit liability or asset is the change during the period in
the net defined benefit liability or asset that arises from the passage of time which is
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.
FRS 19.8
FRS 19.103
FRS 19.8
FRS 19.123
Remeasurements comprising actuarial gains and losses, return on plan assets and any
change in the effect of the asset ceiling (excluding net interest on defined benefit liability)
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.
FRS 19.127
FRS 19.122
Plan assets are assets that are held by a long-term employee benefit fund or qualifying
insurance policies. Plan assets are not available to the creditors of the Group, nor can they
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).
FRS 19.8
FRS 19.113
The Groups right to be reimbursed of some or all of the expenditure required to settle a
defined benefit obligation is recognised as a separate asset at fair value when and only
when reimbursement is virtually certain.
FRS 19.116
Appendix A-4
X.
X.X
FRS 1.125
Appendix A-4
Extracts of notes to the financial statements illustrating the disclosures relating to defined benefit plan:
X.
US plan
Total
31
December
2014
$000
31
December
2013
$000
31
December
2014
$000
31
December
2013
$000
31
December
2014
$000
31
December
2013
$000
31
December
2014
$000
31
December
2013
$000
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
XXX
(XXX)
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
(XXX)
XXX
XXX
XXX
XXX
XXX
XXX
FRS 19.135.a
FRS 19.139.a.i
Appendix A-4
X.
Unfunded
post-employment
medical
benefits
US plan
Total
2014
2013
2014
2013
2014
2013
2014
2013
$000
$000
$000
$000
$000
$000
$000
$000
At 1 January
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
Interest cost
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
XXX
XXX
XXX
XXX
XXX
XXX
(XXX)
XXX
(XXX)
XXX
(XXX)
XXX
XXX
XXX
XXX
XXX
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
XXX
(XXX)
XXX
(XXX)
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
Appendix A-4
X.
At 1 January
Interest income
US plan
Total
2014
2013
2014
2013
2014
2013
$000
$000
$000
$000
$000
$000
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
Remeasurement
gains/(losses)
Return on plan assets
XXX
XXX
XXX
XXX
XXX
XXX
Contributions by employer
XXX
XXX
XXX
XXX
XXX
XXX
XXX
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
(XXX)
XXX
(XXX)
XXX
(XXX)
XXX
(XXX)
XXX
(XXX)
XXX
XXX
XXX
XXX
XXX
XXX
Benefits paid
Assets distributed on
settlements
Effects of business
combinations and disposal
Exchange differences
At 31 December
FRS 19.140.a.iii
FRS 19.141
At 1 January
Interest income
2014
2013
$000
$000
XXX
XXX
Remeasurement gains/(losses)
Changes in the effect of
limiting to asset ceiling1
Exchange differences
At 31 December
(XXX)
XXX
XXX
The maximum economic benefit available is a combination of expected refunds from the plan and
reductions in future contributions.
Appendix A-4
X.
The fair value of plan assets by each classes as at the end of the reporting period are as follow:
Funded pension plans
Singapore plan
31 December
2014
$000
US plan
31 December
2013
$000
31 December
2014
$000
Total
31 December
2013
$000
31 December
2014
$000
31 December
2013
$000
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
Asset-backed securities
Structured debts
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
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.
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).
FRS 19.143
Appendix A-4
X.
2013
XX
XX
US plan
XX
XX
Singapore plan
XX
XX
US plan
XX
XX
Singapore plan
XX
XX
US plan
XX
XX
Male
XX
XX
Female
XX
XX
Male
XX
XX
Female
XX
XX
XX
XX
Discount rates:
US plan
FRS 19.144
Appendix A-4
X.
FRS 19.145
31 December 2014
Discount rates
Future salary increases
Future pension increases
Post retirement mortality for
pensioners at 65:
Male
Female
Healthcare cost increase rate
Increase/(decrease)
Singapore
Plan
US Plan
Unfunded
postemployment
medical
benefits
(XXX)
(XXX)
(XXX)
- XX basis points
XXX
XXX
XXX
+XX %
XXX
XXX
XXX
- XX %
(XXX)
(XXX)
(XXX)
+XX %
XXX
XXX
XXX
- XX %
(XXX)
(XXX)
(XXX)
+XX %
XXX
XXX
XXX
- XX %
(XXX)
(XXX)
(XXX)
+XX %
XXX
XXX
XXX
- XX %
(XXX)
(XXX)
(XXX)
+XX %
XXX
XXX
XXX
- XX %
(XXX)
(XXX)
(XXX)
The management performed an Asset-Liability Matching Study (ALM) annually. The principal
technique of the Groups 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 Groups 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 Groups defined benefit pension plans are funded by its subsidiaries. The employees of the
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.
The average duration of the defined benefit obligation at the end of the reporting period is 18.4
years (2013: 17.5 years).
FRS19.146
FRS19.147.a
FRS19.147.b
FRS19.147.c
Appendix A-4
Commentary:
To meet the disclosure objective of Revised FRS 19 for defined benefit plans, an entity shall
consider all the following:
FRS 19.136
between conditional benefits, amounts attributable to future salary increases and other
benefits
different characteristics such as flat salary pension plans, final salary pension plans or
post-employment medical plans
When disclosing the characteristics of defined benefit plans and risks associated with them,
an entity shall disclose:
FRS 19.137
FRS 19.138
FRS 19.139
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 entitys 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
any reimbursement rights and the related obligation, if applicable.
FRS 19.140.b
Appendix A-4
Commentary (continued):
Past service cost and gains and losses arising from settlements need not be distinguished if
they occur together.
FRS 19.141.d
In the financial statements for periods beginning before 1 January 2014, an entity need not
present comparative information for the disclosures about the sensitivity of the defined
benefit obligation.
FRS 19.173.b
A sensitivity analysis for each significant assumption as of the end of the reporting
period, showing how the defined benefit obligation would have been affected by
changes in the relevant assumption that were reasonably possible at that date.
FRS 19.145.a
The method and assumptions used in preparing the sensitivity analyses and the
limitation of those methods.
FRS 19.145.b
Changes from the previous period in the methods and assumptions used in preparing
the sensitivity analyses, and the reasons for such changes.
FRS 19.145.c
A description of any asset-liability matching strategies used by the plan or the entity,
including the use of annuities and other techniques, such as longevity swaps, to
manage risk.
FRS 19.146
A description of any funding arrangements, and funding policy that affect future
contributions to the defined benefit plan.
FRS 19.147.a
Expected contributions to the plan for the next annual reporting period.
FRS 19.147.b
Information about the maturity profile of the defined benefit obligation (including,
but not limited to, weighted average duration of the defined benefit obligation).
FRS 19.147.c
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
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
entitys 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.
ii.
(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.
ii.
the reason why sufficient information is not available to enable the entity to
account for the plan as a defined benefit plan.
FRS 19.33.b
FRS 19.148
Appendix A-4
Commentary (continued):
the expected contributions to the plan for the next annual reporting period.
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 entitys proportion of the total contributions to the plan or
the entitys proportion of the total number of active members, retired members,
and former members entitled to benefits, if that information is available.
FRS 19.148
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
entities under common control. If an entity participates in a defined benefit plan that shares
risks between entities under common control, it shall disclose:
FRS 19.149
(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
another group entitys financial statements if:
FRS 19.150
(a) that group entitys financial statements separately identify and disclose the information
required about the plan; and
(b) that group entitys 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.
FRS 19.41
and
Description
Reference
Preface
Framework
Yes.
P
P
FRS 1
FRS 2
Inventories
FRS 7
FRS 8
FRS 10
FRS 11
Construction Contracts
FRS 12
Income Taxes
FRS 16
FRS 17
Leases
FRS 18
Revenue
FRS 19
Employee Benefits
FRS 20
FRS 21
FRS 23
Borrowing Costs
FRS 24
FRS 26
FRS 27
No.
Notes
i
P
FRS 28
FRS 29
FRS 32
FRS 33
FRS 34
FRS 36
Impairment of Assets
FRS 37
FRS 38
Intangible Assets
FRS 39
FRS 40
Investment Property
FRS 41
Agriculture
FRS 101
FRS 102
Share-based Payment
FRS 103
Business Combinations
FRS 104
Insurance Contracts
FRS 105
FRS 106
FRS 107
FRS 108
Operating Segments
FRS 110
FRS 111
Joint Arrangements
FRS 112
FRS 113
FRS 114
P
P
Performed any one-off revaluation on its property, plant and equipment between 1
January 1984 and 31 December 1996 (both dates inclusive), from complying with the
requirement to keep the valuation current by periodic valuation.
IAS 16 does not have such a transitional provision and therefore, all property, plant and
equipment that had been revalued prior to adoption of IAS 16 would have to be revalued on a
periodic basis.
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.
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
Reference
Description
Yes.
INT FRS 7
INT FRS 10
INT FRS 12
INT FRS 13
INT FRS 15
INT FRS 21
INT FRS 25
INT FRS 27
INT FRS 29
INT FRS 31
INT FRS 32
Levies
No.
Notes
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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