Statements
3. SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting
The financial statements of the Group and of the Company have been prepared under the historical cost convention.
Company No. 691431 - D
The accompanying Notes form an integral part of the Financial Statements.
NET (DECREASE)/
INCREASE IN CASH AND CASH
EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR
Cash and cash equivalents comprise:
Cash and bank balances Deposits placed with licensed financial institutions
Group Company
Note 2010 2009 2010 2009
RM RM RM RM
11
(54,035,903) 182,816,287 (152,711,052) 182,714,322
367,516,710 184,700,423 367,414,745 184,700,423
313,480,807 367,516,710 214,703,693 367,414,745
7,842,807 4,660,710 6,065,693 4,558,745 305,638,000 362,856,000 208,638,000 362,856,000 313,480,807 367,516,710 214,703,693 367,414,745
Group Company
2010 2009 2010 2009
RM RM RM RM
Company No. 691431 - D
MALAYSIAN BIOTECHNOLOGY CORPORATION SDN. BHD.
(Incorporated in Malaysia) AND ITS SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010 1. GENERAL INFORMATION
The Company is a private limited liability company, incorporated and domiciled in Malaysia.
The Company is principally engaged to act as a dedicated and professional one-stop agency for the government in developing biotechnology industry in the country whilst the principal activities of the subsidiaries are as stated in Note 9. There has been no significant change in the nature of these principal activities during the year.
The total number of employees of the Group and of the Company at year end were 186 (2009:
160) and 186 (2009: 160) respectively.
The registered office and principal place of business of the Company is located at Level 23, Menara Atlan, 161B, Jalan Ampang, 50450 Kuala Lumpur.
The financial statements of the Group and of the Company have been authorised by the Board of Directors for issuance on 28 April 2011.
2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
The financial statements of the Group and of the Company have been prepared in accordance with the provisions of the Companies Act, 1965 and Private Entity Reporting Standards in Malaysia.
3. SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting
The financial statements of the Group and of the Company have been prepared under the historical cost convention.
Company No. 691431 - D
The accompanying Notes form an integral part of the Financial Statements.
NET (DECREASE)/
INCREASE IN CASH AND CASH
EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR
Cash and cash equivalents comprise:
Cash and bank balances Deposits placed with licensed financial institutions
Group Company
Note 2010 2009 2010 2009
RM RM RM RM
11
(54,035,903) 182,816,287 (152,711,052) 182,714,322
367,516,710 184,700,423 367,414,745 184,700,423
313,480,807 367,516,710 214,703,693 367,414,745
7,842,807 4,660,710 6,065,693 4,558,745 305,638,000 362,856,000 208,638,000 362,856,000 313,480,807 367,516,710 214,703,693 367,414,745
Group Company
2010 2009 2010 2009
RM RM RM RM
Company No. 691431 - D Basis of Consolidation Subsidiaries
Subsidiaries are entities, including unincorporated entities, controlled by the Group. Control exists when the Group has the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. Subsidiaries are consolidated using the purchase method of accounting.
Under the purchase method of accounting, the financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
Investments in subsidiaries are stated in the Company’s balance sheet at cost less any impairment losses, unless the investment is classified as held for sale (or included in a disposal group that is classified as held for sale).
Minority interest
Minority interest at the balance sheet date, being the portion of the net identifiable assets (excluding goodwill) of subsidiaries attributable to equity interests that are not owned by the Company, whether directly or indirectly through subsidiaries, are presented in the consolidated balance sheet and statement of changes in equity within equity, separately from equity attributable to the equity shareholders of the Company. Minority interest in the results of the Group are presented on the face of the consolidated income statement as an allocation of the total profit or loss for the year between minority interest and the equity shareholders of the Company.
Where losses applicable to the minority exceed the minority’s interest in the equity of a subsidiary, the excess, and any further losses applicable to the minority, are charged against the Group’s interest except to the extent that the minority has a binding obligation to, and is able to, make additional investment to cover the losses. If the subsidiary subsequently reports profits, the Group’s interest is allocated with all such profits until the minority’s share of losses previously absorbed by the Group has been recovered.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.
Company No. 691431 - D Foreign Currency Conversion
Transactions in foreign currencies are converted into Ringgit Malaysia at the exchange rates prevailing at the transaction dates. Foreign currency assets and liabilities at financial year-end are converted into Ringgit Malaysia at the exchange rates prevailing at the balance sheet date.
All foreign exchange gains or losses are taken up in the income statements.
The principal closing rates used in the translation of foreign currency amounts are as follows:
Income Tax
Income tax comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is provided for, using the ‘liability’ method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither the accounting profit nor taxable profit.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient future taxable profit will be available to allow all or part of the asset to be recovered.
Deferred tax is measured at the tax rates that are expected to apply in the year when the asset is realised or the liability settled, based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is recognised in the income statements, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill.
2010 2009
RM RM
1 United States Dollar 3.08 3.42
1 Singapore Dollar 2.38 2.44
Company No. 691431 - D Basis of Consolidation Subsidiaries
Subsidiaries are entities, including unincorporated entities, controlled by the Group. Control exists when the Group has the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. Subsidiaries are consolidated using the purchase method of accounting.
Under the purchase method of accounting, the financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
Investments in subsidiaries are stated in the Company’s balance sheet at cost less any impairment losses, unless the investment is classified as held for sale (or included in a disposal group that is classified as held for sale).
Minority interest
Minority interest at the balance sheet date, being the portion of the net identifiable assets (excluding goodwill) of subsidiaries attributable to equity interests that are not owned by the Company, whether directly or indirectly through subsidiaries, are presented in the consolidated balance sheet and statement of changes in equity within equity, separately from equity attributable to the equity shareholders of the Company. Minority interest in the results of the Group are presented on the face of the consolidated income statement as an allocation of the total profit or loss for the year between minority interest and the equity shareholders of the Company.
Where losses applicable to the minority exceed the minority’s interest in the equity of a subsidiary, the excess, and any further losses applicable to the minority, are charged against the Group’s interest except to the extent that the minority has a binding obligation to, and is able to, make additional investment to cover the losses. If the subsidiary subsequently reports profits, the Group’s interest is allocated with all such profits until the minority’s share of losses previously absorbed by the Group has been recovered.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.
Company No. 691431 - D Foreign Currency Conversion
Transactions in foreign currencies are converted into Ringgit Malaysia at the exchange rates prevailing at the transaction dates. Foreign currency assets and liabilities at financial year-end are converted into Ringgit Malaysia at the exchange rates prevailing at the balance sheet date.
All foreign exchange gains or losses are taken up in the income statements.
The principal closing rates used in the translation of foreign currency amounts are as follows:
Income Tax
Income tax comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is provided for, using the ‘liability’ method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither the accounting profit nor taxable profit.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient future taxable profit will be available to allow all or part of the asset to be recovered.
Deferred tax is measured at the tax rates that are expected to apply in the year when the asset is realised or the liability settled, based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is recognised in the income statements, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill.
2010 2009
RM RM
1 United States Dollar 3.08 3.42
1 Singapore Dollar 2.38 2.44
Company No. 691431 - D
Impairment of Assets Excluding Goodwill
At each balance sheet date, the Group reviews the carrying amounts of its non-current assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value-in-use. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the income statements.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the income statements.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses.
Depreciation of property, plant and equipment, other than freehold land, construction and other work in-progress which are not depreciated, is computed on the straight-line method at the following annual rates based on the estimated useful lives of the various assets:
Office equipment 20%
Computer equipment 33 1/3%
Furniture and fittings 20%
Motor vehicles 20%
The residual value, estimated useful life and depreciation method of property, plant and equipment are reviewed at each balance sheet date and, if expectations differ from previous estimates, the changes will be accounted for as a change in an accounting estimate.
Gain or loss arising from the disposal of an asset is determined as the difference between the net disposal proceeds and the carrying amount of the asset, and is recognised in the income statements.
Company No. 691431 - D
Assets Acquired Under Hire-Purchase Arrangements
Assets acquired under hire-purchase arrangements are capitalised in the financial statements and the corresponding obligations are treated as liabilities. Finance charges are allocated to the income statements to give a constant periodic rate of interest on the remaining hire-purchase liabilities.
Intangible asset Patent and licenses
Patent, licenses and other similar purchased rights of technology platform are recognized as intangible assets if it is probable that the future economic benefits that are attributable to such assets will flow to the Company and the cost of such assets can be reliably measured.
Intangible asset is stated at cost less accumulated amortisation and impairment losses.
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditures are expensed as incurred.
Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Intangible assets with indefinite useful lives are tested for impairment annually and whenever there is an indication that they may be impaired. Intangible assets are amortised from the date that they are available for use. The estimated useful lives of the intangible assets are determined based on the estimated life span of the patent, licences or rights of the technology platform. The estimated useful lives for the current financial year is between 20 to 25 years.
Amortisation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted, if appropriate.
Company No. 691431 - D
Impairment of Assets Excluding Goodwill
At each balance sheet date, the Group reviews the carrying amounts of its non-current assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value-in-use. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the income statements.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the income statements.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses.
Depreciation of property, plant and equipment, other than freehold land, construction and other work in-progress which are not depreciated, is computed on the straight-line method at the following annual rates based on the estimated useful lives of the various assets:
Office equipment 20%
Computer equipment 33 1/3%
Furniture and fittings 20%
Motor vehicles 20%
The residual value, estimated useful life and depreciation method of property, plant and equipment are reviewed at each balance sheet date and, if expectations differ from previous estimates, the changes will be accounted for as a change in an accounting estimate.
Gain or loss arising from the disposal of an asset is determined as the difference between the net disposal proceeds and the carrying amount of the asset, and is recognised in the income
Company No. 691431 - D
Assets Acquired Under Hire-Purchase Arrangements
Assets acquired under hire-purchase arrangements are capitalised in the financial statements and the corresponding obligations are treated as liabilities. Finance charges are allocated to the income statements to give a constant periodic rate of interest on the remaining hire-purchase liabilities.
Intangible asset Patent and licenses
Patent, licenses and other similar purchased rights of technology platform are recognized as intangible assets if it is probable that the future economic benefits that are attributable to such assets will flow to the Company and the cost of such assets can be reliably measured.
Intangible asset is stated at cost less accumulated amortisation and impairment losses.
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditures are expensed as incurred.
Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Intangible assets with indefinite useful lives are tested for impairment annually and whenever there is an indication that they may be impaired. Intangible assets are amortised from the date that they are available for use. The estimated useful lives of the intangible assets are determined based on the estimated life span of the patent, licences or rights of the technology platform. The estimated useful lives for the current financial year is between 20 to 25 years.
Amortisation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted, if appropriate.