FINANCIAL STATEMENTS
2. Summary of significant accounting policies (cont’d) 2 Changes in accounting policies (cont’d)
• Amendments to FRS 2 Share-based Payment
• Amendments to FRS 5 Non-current Assets Held for Sale and Discontinued Operations
• Amendments to FRS 127 Consolidated and Separate Financial Statements
• Amendments to FRS 132 Financial Instruments: Presentation
• Amendments to FRS 132 Classification of Rights Issues
• Amendments to FRS 138 Intangible Assets
• Amendments to FRS 139 Financial Instruments: Recognition and Measurement,
FRS 7 Financial Instruments: Disclosures and IC Interpretation 9 Reassessment of Embedded Derivatives
• Amendments to IC Interpretation 9 Reassessment of Embedded Derivatives
• Improvements to FRS issued in 2009
• IC Interpretation 9 Reassessment of Embedded Derivatives
• IC Interpretation 10 Interim Financial Reporting and Impairment
• IC Interpretation 11 FRS 2 - Group and Treasury Share Transactions
• IC Interpretation 12 Service Concession Arrangements
• IC Interpretation 13 Customer Loyalty Programmes
• IC Interpretation 14 FRS119 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and
their Interaction
• IC Interpretation 16 Hedges of a Net Investment in a Foreign Operation
• IC Interpretation 17 Distributions of Non-cash Assets to Owners
FRS 4 Insurance Contracts and TR i-3 Presentation of Financial Statements of Islamic Financial Institutions will also be effective for annual periods beginning on or after 1 November 2010. These FRS are, however, not applicable to the Group or the Company.
Adoption of the above standards and interpretations did not have any effect on the financial performance or
position of the Group and of the Company except for those discussed below:
FRS 7 Financial Instruments: Disclosures
Prior to 1 November 2010, information about financial instruments was disclosed in accordance with the requirements of FRS 132 Financial Instruments: Disclosure and Presentation. FRS 7 introduces new disclosures to improve the information about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures
about credit risk, liquidity risk and market risk, including sensitivity analysis to market risk.
The Group and the Company have applied FRS 7 prospectively in accordance with the transitional provisions.
Hence, the new disclosures have not been applied to the comparatives. The new disclosures are included through out the Group’s and the Company’s financial statements for the year ended 31 October 2011.
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
2. Summary of significant accounting policies
(cont’d) 2.2 Changes in accounting policies (cont’d)FRS 101 Presentation of Financial Statements (Revised)
The revised FRS 101 introduces changes in the presentation and disclosures of financial statements. The revised Standard separates owner and non-owner changes in equity. The statement of changes in equity includes only details of transactions with owners, with all non-owner changes in equity presented as a single line. The Standard also introduces the statement of comprehensive income, with all items of income and expense recognised in profit or loss, together with all other items of recognised income and expense recognised directly in equity, either in one single statement, or in two linked statements. The Group and the Company have
elected to present this statement as one single statement.
In addition, a statement of financial position is required at the beginning of the earliest comparative period following a change in accounting policy, the correction of an error or the classification of items in the financial
statements.
The revised FRS 101 also requires the Group to make new disclosures to enable users of the financial statements
to evaluate the Group’s objectives, policies and processes for managing capital.
The revised FRS 101 was adopted restrospectively by the Group and the Company.
FRS 139 Financial Instruments: Recognition and Measurement
FRS 139 establishes principles for recognising and measuring financial assets, financial liabilities and some contracts to buy and sell non-financial items. The Group and the Company have adopted FRS 139 prospectively on 1 November 2010 in accordance with the transitional provisions. The effect arising from the adoption of this Standard has been accounted for by adjusting the opening balance of retained earnings as at 1 November 2010. Comparatives are not restated. The details of the changes in accounting policies and the effects arising
from the adoption of FRS 139 are discussed below:
Financial guarantee contracts
During the current and prior years, the Company provided financial guarantees to banks in connection with bank loans and other banking facilities granted to its subsidiaries and the purchase of plant and equipment by a subsidiary. Prior to 1 November 2010, the Company did not provide for such guarantees unless it was more likely than not that the guarantees would be called upon. The guarantees were disclosed as contingent liabilities.
Upon the adoption of FRS 139, all unexpired financial guarantees issued by the Company are recognised as financial liabilities and are measured at their initial fair value less accumulated amortisation as at 1 November 2010. At the reporting date, no value was placed on these corporate guarantees because there were no significant difference in the net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee where the directors regard the value of the credit enhancement provided by the corporate guarantee as minimal.
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
2. Summary of significant accounting policies
(cont’d) 2.2 Changes in accounting policies (cont’d)Inter company loans
During the current and prior years, the Company granted interest-free loans and advances to its subsidiaries.
Prior to 1 November 2010, these loans and advances were recorded at cost in the Company’s financial statements. Upon the adoption of FRS 139, the interest-free loans or advances are recorded initially at a fair value. As the loans and advances are repayable on demand, the cost of these amounts are reasonable
approximation of their fair values.
Trade payables - retention sums
Prior to 1 November 2010, trade payables were recorded at cost in the financial statements. Upon the adoption of FRS 139, the trade payables are recorded initially at their fair values that are lower than costs. Subsequent to initial recognition, the trade payables are measured at amortised cost. As at 1 November 2010, the Group and the Company has remeasured such trade payables at their amortised cost of RM24,979,616 and RM10,711,494 respectively. The adjustments to their previous carrying amounts are recognised as adjustment to the opening balance of retained earnings as at 1 November 2010.
The following are effects arising from the above changes in accounting policies:
Increase/(decrease) As at As at 31 October 1 November
2011 2010
RM RM
Statement of financial position
Group
Trade payables (1,775,892) (1,313,200)
Deferred tax liabilities 443,973 328,300
Retained earnings 1,331,919 984,900
Company
Trade payables (350,796) (302,576)
Deferred tax liabilities 87,699 75,644
Retained earnings 263,097 226,932
Increase/(decrease)
Group Company
2011 2011
RM RM
Statement of comprehensive income
Cost of sales (784,583) (116,193)
Finance cost - unwinding of discount 321,891 67,972
Profit before tax from continuing operations 462,692 48,221
Proft from continuing operations, net of tax 347,019 36,166
Other comprehensive income for the year, net of tax 347,019 36,166
Increase/(decrease)
2011
Group Sen per share