Revenue from landscaping and maintenance work
Revenue form landscaping and maintenance work is recognised upon completion at balance sheet date. Where the outcome of the work cannot be measured reliably, revenue is recognised to the extent of the relevant expenses or costs of the work that are recoverable.
Financial Instruments
Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instruments. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.
Other Non-Current Investments
Other non-current investments (other than investments in subsidiaries, associates and investment properties) are stated at cost less allowance for diminution in value. Cost is determined on the weighted average basis while market value is determined based on quoted market values. On disposal of an investment, the difference between the net disposal proceeds and its carrying amount is recognised in the income statement.
Trade Receivables
Trade receivables are recognised and stated at original invoiced amounts and carried at anticipated realizable values. Bad debts are written off when it is established that they are irrecoverable. Specific allowance is made for known doubtful debts. An estimate is made for doubtful debts based on a review of all outstanding amounts as at the balance sheet date.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, balances and deposits with licensed financial institutions and fixed income trust funds that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, net of outstanding bank overdraft.
Trade Payables
Trade payables are stated at cost which approximates the fair value of the consideration to be paid in the future for goods and services rendered.
Interest-Bearing Borrowings
Interest-bearing bank loans and overdrafts are recorded at the amount of proceeds received, net of transaction costs. Borrowing costs directly attributable to the acquisition and construction of plant and equipment are capitalized as part of the cost of those assets, until such time as the assets are ready for their intended use. All other borrowing costs are charged to the income statement as an expense in the period in which they are incurred.
Equity Instruments
Ordinary shares are classified as equity. Dividends payable on ordinary shares are recognised in equity in the period in which they are declared. The transaction costs of an equity transaction, other than in the context of a business combination, are accounted for as a deduction from equity, net of tax. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided. Cost of issuing equity securities in connection with a business combination is included in the cost of acquisition. When the share capital of the Company is repurchased, the consideration paid, including any attributable transaction costs, is presented as a change in equity. Repurchased shares are classified as treasury shares and presented as a deduction from equity. No gain or loss is recognised in the income statement on the sale, re-issuance or cancellation of treasury shares. Consideration received is presented in the financial statements as a change in equity.
Derivative Financial Instruments
The Group uses derivative financial instruments in the form of forward exchange contracts to hedge its exposure to foreign exchange arising from operating, financing and investing activities. In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes. Derivative financial instruments are not recognised in the financial statements on inception. The underlying foreign currency assets or liabilities are translated at their respective hedged exchange rates and all exchange gains or losses are recognised as income or expense in the income statement in the same period as the exchange differences on the underlying hedged items. Exchange gains and losses arising on contracts entered into as hedges of anticipated future transactions are deferred until the date of such transaction, at which time they are included in the measurement of such transactions.
Biological Assets and Replanting Expenditure
(i) Plantation development expenditure
New planting expenditure incurred on land clearing and upkeep of trees to maturity is capitalised as plantation development expenditure under biological assets and is not amortised.
(ii) Replanting expenditure
Replanting expenditure is charged to the income statement in the year in which the expenditure is incurred.
The Board of Directors is required under Paragraph 15.27(a) of the Bursa Malaysia Securities Berhad Listing Requirements to issue a statement, which follows, explaining their responsibility for preparing the annual audited financial statements.
The directors are required by law to prepare financial statements for each financial year which give a true and fair view of the financial position of the Group and of the Company as at the financial year end and of the results and the cash flows of the Group and of the Company for that financial year.
The Directors consider that, in preparing the financial statements of ABC Berhad for the financial year ended (day/month/year), the Group has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates. The directors also consider that all applicable Financial Reporting Standards in Malaysia have been followed and confirm that the financial statements have been prepared on a going concern basis.
The directors are responsible for ensuring that the Group and the Company keep accounting records which disclose with reasonable accuracy the financial position of the Group and of the Company at any time and which enable them to ensure that the financial statements comply with the provisions of the Companies Act, 1965.
The Directors are also responsible for taking such steps that are reasonably open to them to safeguard the assets of the Group.
PROPERTY DEVELOPMENT COSTS
|
2008 RM |
2007 RM |
|||
| Land – at cost |
x,xxx,xxx |
x,xxx,xxx |
||
| Add : Incidental costs |
xxx,xxx |
x,xxx,xxx |
||
|
x,xxx,xxx |
x,xxx,xxx |
|||
| Cumulative land cost recognised as an expense in income Statement |
(x,xxx,xxx) |
(x,xxx,xxx) |
||
|
x,xxx,xxx |
x,xxx,xxx |
|||
| Add : Development costs | ||||
| Balance at beginning of year |
x,xxx,xxx |
x,xxx,xxx |
||
| Additions during the financial year |
x,xxx,xxx |
x,xxx,xxx |
||
|
x,xxx,xxx |
x,xxx,xxx |
|||
| Less: Cumulative development costs recognised as an expense in income statement |
(x,xxx,xxx) |
x,xxx,xxx |
||
|
x,xxx,xxx |
x,xxx,xxx |
|||
| Less: Transfer to closing inventories (Note x) |
(x,xxx,xxx) |
x,xxx,xxx |
||
|
x,xxx,xxx |
x,xxx,xxx |
|||
Included in development cost is the interest charged as follows:
|
2008 RM |
2007 RM |
|||||
|
Balance at beginning of year |
x,xxx,xxx |
x,xxx,xxx |
||||
|
Amount included in additions during the year |
xxx,xxx |
xxx,xxx |
||||
|
Balance at end of year |
x,xxx,xxx |
x,xxx,xxx |
||||
Significant Accounting Estimates and Judgements
Critical Judgements Made in Applying Accounting Policies
The Company has developed certain criteria based on IFRS 140 in making judgements whether a property qualifies as an investment property. Investment property is a property held to earn rentals or for capital appreciation or both. Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply foods or services or for administrative purposes. If these portions could be sold separately (or leased out separately under a finance lease), the Company would account for the portions separately. If the portions could not be sold separately, the property is an investment property only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes. Judgement is made on an individual property basis to determine whether ancillary services are so significant that a property does not qualify as an investment property.
Key Sources of Estimation Uncertainty
The key assumption concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as stated below:-
1. Impairment of goodwill
The Company determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value-in-use of the cash generating units (“CGU”) to which goodwill is allocated. Estimating a value-in-use amount requires management to make an estimation of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows.
2. Impairment of investment in subsidiaries
The Company determines whether investments in subsidiaries are impaired at least on an annual basis. This requires an estimation of the value-in-use of the Cash Generating Units (“CGU”) to which investments in subsidiaries are allocated. Estimating a value-in-use amount requires management to make an estimation of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows.
3. Property development
The Company recognises property development revenue and expenses in the income statement by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs. Significant judgement is required in determining the stage of completion, the extent of the property development costs incurred, the estimated total property development revenue and costs, as well as the recoverability of the development projects. In making the judgement, the Company evaluates based on past experience and by relying on the work of specialists.
4. Deferred tax assets
Deferred tax assets are recognised for all unabsorbed tax losses and unutilised capital allowances to the extent that it is probable that taxable profit will be available against which the losses and capital allowances can be utilised. Significant judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.
5. Useful lives of property, plant an equipment
The Company estimates the useful lives of property, plant and equipment based on the period over which the assets are expected to be available for use. The estimated useful lives of property, plant and equipment are reviewed periodically and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of the relevant assets. In addition, the estimation of the useful lives of property, plant and equipment are based on internal technical evaluation and experience with similar assets. It is possible, however, that future results of operations could be materially affected by changes in the estimates brought about by changes in factors mentioned above. The amounts and timing of recorded expenses for any period would be affected by changes in these factors and circumstances. A reduction in the estimated useful lives of the property, plant and equipment would increase the recorded expenses and decrease the non-current assets.
6. Construction contracts
The Company recognises contract revenue and expenses in the income statement by using the stage of completion method. The stage of completion is determined by the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs. Significant judgement is required in determining the stage of completion, the extent of the contract costs incurred, the estimated total contract revenue and costs, as well as the recoverability of the contracts. In making the judgement, the Company evaluates based on past experience and by relying on the work of specialists.
7. Allowance for doubtful debts
The Company makes allowance for doubtful debts based on an assessment of the recoverability of receivables. Allowances are applied to receivables where events or changes in circumstances indicate that the carrying amounts may not be recoverable. Management specifically analysed historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in customer payment terms when making a judgement to evaluate the adequacy of the allowance of doubtful debts of receivables. Where the expectation is different from the original estimate, such difference will impact the carrying value of receivables.
8. Allowance for inventories written down
Reviews are made periodically by management on damaged, obsolete and slowmoving inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories.
