Tag: Sample Disclosure in Financial Statements

Sample Disclosure – Accounting Policy Of Financial Guarantees Issued (7 January 2011)

Financial guarantees issued

Financial guarantees issued by the Company and those companies within the consolidated entity (“Group”) are recognised as financial liabilities at the date the guarantee is issued. Liabilities arising from financial guarantee contracts, including Company guarantees of subsidiaries through deeds of cross guarantee, are initially recognised at fair value and subsequently at the higher of the amount determined in accordance with the Group’s provisions accounting policy (please refer to Note XX) and the amount initially recognised less cumulative amortisation.

The fair value of the financial guarantee is determined by way of calculating the present value of the difference in net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligation.

Where guarantees in relation to loans or other payables of subsidiaries or associates are provided for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of the investment in the financial statements of the Company.

Sample Disclosure – Note On Unrecognised Deferred Tax Liability (21 December 2010)

Unrecognised Deferred Tax Liability

The Company has not recognised deferred tax liability amounted to approximately RM10,345,000 as at the end of the financial year relating to temporary differences arising from the difference between the carrying values of property, plant and equipment and their respective tax bases. This is due to the directors are of the opinion that the deferred tax liability is not probable to crystalize in the foreseeable future as a result of the tax holiday period enjoyed by the Company as a pioneer status company, granted by the Government of Malaysia.

Sample Disclosure – Note On Significant Post Balance Sheet Event (20 December 2010)

SIGNIFICANT POST BALANCE SHEET EVENT

On 12 November 2010, the Company entered into a Memorandum of Understanding (“MOU”) with DEF Sdn. Bhd. (a trade debtor of the Company) to extinguish/fully settle trade debts owed to the Company by DEF Sdn. Bhd. and GHI Sdn. Bhd. (a related party of DEF Sdn. Bhd.) totalling RM32,000,000 as at the end of the financial year, via a proposed contra/set-off of properties, comprising the relevant unsold units of commercial shop lots, owned by DEF Sdn. Bhd.. DEF Sdn. Bhd. is in the process of conducting a separate settlement agreements with GHI Sdn. Bhd. relating to this exercise.

The Company has appointed a registered valuer to conduct a valuation exercise on the said properties and the outcome of the valuation was that the preliminary combined indicative values of the relevant unsold units owned by DEF Sdn. Bhd. was higher than the combined debts owed to the Company by DEF Sdn. Bhd., GHI Sdn. Bhd. and XYZ Sdn. Bhd..

This corporate exercise will require the Company’s members’ extraordinary general meeting (“EGM”) to be convened and the EGM is expected to be held in January 2011. The corporate exercise is expected to be completed within 3 months from the date of this report.

Sample Disclosure – Note On Provision For Liabilities (15 December 2010)

PROVISION FOR LIABILITIES


a)   Guaranteed Rental Returns & Marketing Incentives

Provision for guaranteed rental returns and marketing incentives are in respect of the sale of development properties. The provision is made for the expected guaranteed rental returns and marketing incentives granted to the purchasers based on the agreements entered into by the Company with these purchasers. These agreements set out the terms and conditions in which upon fulfilment, would result in the purchasers entitled to payments to be made by the Company.

b)   Liquidated Ascertained Damages

Provision for liquidated ascertained damages is in respect of projects undertaken by the Company. The provision is recognised for expected amount of liquidated ascertained damages claims based on the applicable agreements entered into by the Company.

Sample Disclosure – Note On Capital Commitments (10 December 2010)

CAPITAL COMMITMENTS

Capital commitments contracted but not provided for in the financial statements are as follows:

On 1 April 2010, the Company entered into a sale and purchase agreement (“SPA”) to purchase a piece of land for a consideration of RM49 million. As at the date of this report, the Company has paid a deposit sum of RM4.9 million, representing 10% of the purchase consideration of the said land. Settlement of the balance sum is currently pending fulfilment of certain key SPA conditions by the vendor.

Sample Disclosure – Note On Change Of Comparative Figures (1 December 2010)

COMPARATIVES

The following paragraphs describe the impact in relation to the new standards, amendment to published standard that have been adopted by the Group on the comparatives of the financial statements.

(a) FRS 8 “Operating segments”

FRS 8 “Operating segment” requires a “management approach”, under which segment information is presented on the same basis as that used for internal reporting purposes. This has resulted in an increase in the number of reportable segments as compared to the previously reported segments as follows:

(i) Engineering and Construction;

(ii) Concessions (which also includes Infrastructure and Investment) and

(iii) Operating and Maintenance.

The adoption of FRS 8 “Operating segment” has resulted in a consequential amendment to FRS 136 “Impairment of assets” in respect of the allocation of goodwill for impairment testing. As a result, each unit or group of units to which goodwill is allocated shall not be larger than an operating segment determined in accordance with FRS 8 instead of the previous standard, FRS 114 “Segment reporting”.

The change in reportable segments of the Group has not resulted in any additional goodwill impairment. Other than the segment presentation change, there was no impact on the measurement of the group’s assets and liabilities.

(b) IC Interpretation 12 “Service concession arrangements”

The early adoption of IC Interpretation 12 has resulted in a change in accounting policy for concession consideration components of construction services (FRS111) and operation services (FRS118) generated from Service Concession Agreements.

Prior to the adoption of this IC Interpretation 12, no construction revenue was recognised from the Service Concession Agreements and the Infrastructure Assets were recognised as property, plant and equipment of the Group. This change in accounting policy requires that the fair value of construction revenue be recognised as financial assets and the effect has been accounted for retrospectively in accordance with requirements of FRS 108 – Accounting policies, Changes in Accounting Estimates and Errors. Comparatives have been restated to conform to current year’s presentation.

The effects on prior year’s consolidated financial statements are set out below.

Restatement of the income statements for the financial year ended 30 September 2009

The following table discloses the adjustments that have been made in accordance with the change in accounting policy to each of the line items in the Group and Company’s income statement for the financial year ended 30 September 2009 and reclassification of prior year’s comparatives to conform with current year presentation.


Restatement of the balance sheets as at 30 September 2009

The following table discloses the adjustments that have been made in accordance with the change in accounting policy to each of the line items in the Group and Company’s balance sheet as at 30 September 2009 and reclassification of prior year’s comparatives to conform with current year presentation.


Restatement of the cash flow statement for the financial year ended 30 September 2009

The following table discloses the adjustments that have been made in accordance with the change in accounting policy to each of the line items in the Group’s cash flows for the financial year ended 30 June 2009 and reclassification of prior year’s comparatives to conform with current year presentation.