Notice of Annual General Meeting - Announcements - Bursa Malaysia

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36 ANNUAL REPORT 2012 GROMUTUAL BERHAD (Company No. 625034-X) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012 (continue) Income tax on items of other comprehensive income is required to be allocated on the same basis. The amendments to FRS 101 are effective for annual periods beginning on or after 1 July 2012. The presentation of items of other comprehensive income will be modified accordingly when the amendments are applied in the future accounting periods. The amendments to FRS 101 relating to “Clarification of the requirements for comparative information” clarifies that an entity is required to present a third statement of financial position only if a retrospective application, retrospective restatement or reclassification has a material effect on the information in the statement of financial position at the beginning of the preceding period. Nevertheless, an entity may present comparative information in addition to the minimum comparative financial statements as long as that information is prepared in accordance with FRSs. In addition, the amendments clarify that other than the disclosure of certain specified information, related notes are not required to accompany the opening statement of financial position as at the beginning of the preceding period. The amendments will be applied accordingly when it becomes effective for application. 2.3 Malaysian Financial Reporting Standards On 19 November 2011, the MASB issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards Framework (“MFRS Framework”) in conjuction with its planned convergence of FRSs with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) on 1 January 2012. The MFRS Framework is a fully IFRS-compliant framework, equivalent to IFRSs which is mandatory for adoption by all Entities Other than Private Entities for annual periods beginning on or after 1 January 2012, with the exception for Transitioning Entities, which are subject to the application of MFRS 141 Agriculture and/or IC Interpretation 15 Agreements for the Construction of Real Estate are given an option to defer adoption of the MFRS Framework for an additional one year. Transitioning Entities also includes those entities that consolidate, equity account or proportionately consolidate an entity that has chosen to continue to apply the FRS Framework for annual periods beginning on or after 1 January 2012. On 30 June 2012, the MASB has decided to allow Transitioning Entities to defer the adoption of MFRS Framework for another year. Consequently, adoption of the MFRS Framework by the Transitioning Entities will be mandatory for annual periods beginning on or after 1 January 2014. The Group and the Company, being the Transitioning Entities, will be required to prepare financial statements using MFRS Framework in its first MFRS financial statements for the year ending 31 December 2014. In presenting its first MFRS financial statements, the Group and the Company will be required to restate the comparative financial statements to amounts reflecting the application of MFRS Framework. The majority of the adjustment required on transition will be made, retrospectively, against opening retained profits. Further, an explicit and unreserved statement of compliance with IFRSs will be made in the financial statements. The Group is currently assessing the impact of the financial effects of the differences between FRS and accounting standards under the MFRS Framework. 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, unless otherwise indicated in the accounting policies stated below. Basis of Consolidation The consolidated financial statements incorporate the financial statements of the Company and entities (its subsidiary companies) controlled by the Group as of the reporting date. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of the subsidiary companies 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. The financial statements of the Company and its subsidiary companies used in the preparation of the consolidated financial statements shall be prepared as of the same reporting date. Where necessary, adjustments are made to the financial statements of subsidiary companies to bring their accounting policies into line with those used by other members of the Group. All inter-company transactions, balances, income and expenses are eliminated in full on consolidation. Investments in Subsidiary Companies Investment in subsidiary companies which are eliminated on consolidation, are stated at cost less impairment losses, if any, in the Company’s separate financial statements.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012 (continue) Business Combinations The acquisition of subsidiary companies is accounted for using the acquisition method. The cost of the business combination is measured as the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under FRS 3 Business Combinations are recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with FRS 5 Non-Current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell. Functional and Presentation Currency The financial statements of the Company and the Group are presented in Ringgit Malaysia (“RM”), which is the Company’s functional currency and presentation currency. Revenue Recognition Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for rebates and other similar allowances. The revenue recognition policies of the Group and of the Company are as follows: Property development projects - upon signing of individual sale and purchase agreements, based on the stage of completion method as determined by the proportion of the property development projects sold attributable to the percentage of development work performed during the year. Sales of vacant land and completed development units - upon transfer of significant risks and rewards to the buyers. Construction contracts - refer to policy on construction contracts below. Rental income from investment properties - accrued on a straight-line basis over the term of the relevant lease. Project management fee, management fee and project incentive income - when the services are rendered. Sales of oil palm - upon delivery of products and customers’ acceptance, net of discounts and returns and when significant risks and rewards of ownership have transferred to the buyer. Dividend income - when the shareholder’s right to receive payment is established. Interest income - accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition. Leasing Lease in terms of which the Group and the Company assume substantially all the risks and rewards of ownership are classified as finance lease. On initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and present value of minimum lease payments. Subsequent to the initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Other leases are operating leases and are not recognised in the Group and the Company’s statements of financial position. Operating lease income and payments are recognised as revenue and expense in the statements of comprehensive income on a straight-line basis over the relevant lease terms. Employee Benefits (i) Short-term Benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees. Short-term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences and short-term non-accumulating compensated absences such as sick leave are recognised when the absences occur. 01 37 ANNUAL REPORT 2012 GROMUTUAL BERHAD (Company No. 625034-X)
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