Notice of Annual General Meeting - Announcements - Bursa Malaysia

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42 ANNUAL REPORT 2012 GROMUTUAL BERHAD (Company No. 625034-X) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012 (continue) If any such evidence exists, the amount of impairment loss is measured as the difference between the assets’ carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. Financial Liabilities and Equity Instruments Debts or equity instruments are classified either as financial liabilities or equity in accordance to the substance of the contractual arrangements. Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group and the Company are recognised at the proceeds received, net of direct issue costs. Financial liabilities Financial liabilities, within the scope of FRS 139, are recognised in the statement of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities. Financial liabilities at fair value through profit or loss (“FLFVTPL”) Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or it is designated as at FVTPL. A financial liability is classified as held for trading if: • it has been incurred principally for the purpose of repurchasing in the near future; or • it is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or • it is a derivative that is not designated and effective as a hedging instrument A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if: • such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or • the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group's documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or • it forms part of a contract containing one or more embedded derivatives, and FRS 139 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL. The Group and the Company have not designated any financial liabilities as at FVTPL. Other financial liabilities Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition. Financial guarantee contracts A financial guarantee contract is a contract that requires the issuer to make specified payment to reimburse the holder for a loss it incurs because a specified debtors fails to make payment when due.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012 (continue) Financial guarantee contract liabilities are measured initially at their fair values, net of transaction cost. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to the financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation. Derecognition of financial liability The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire. Borrowing Costs Borrowing costs directly attributable to the acquisition or construction of assets which require a substantial period of time to get them ready for their intended use are capitalised and included as part of the related assets. Capitalisation of borrowing costs will cease when the assets are ready for their intended use. The Group capitalises borrowing costs for all qualifying assets. All other borrowing costs are recognised in profit or loss in the period they are incurred. Statements of Cash Flows The Group and the Company adopt the direct method in the preparation of the statements of cash flows. Cash equivalents comprise cash and bank balances, short term, highly liquid investments that are readily convertible to a known amount of cash with insignificant risks of changes in value against which bank overdrafts, if any, is deducted. Critical Accounting Judgements and Key Sources of Estimation Uncertainty In the application of the Group’s accounting policies, which are described in Note 3, the management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in the future periods if the revision affects both current and future periods. (a) Critical judgements in applying the Group’s accounting policies In the process of applying the Group’s accounting policies, the directors are of the opinion that there are no instances of application of judgement which are expected to have a significant effect on the amounts recognised in the financial statements. (b) Key sources of estimation uncertainty The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. i. Fair value of investment properties The fair value of investment properties, which is determined by the directors, is arrived at by reference to market evidence of transaction prices for similar properties which could be exchanged on the date of valuation in an arm’s length transaction wherein the parties had each acted competently, prudent and without compulsion or by relying on the work of accredited independent firm of valuers using open market value based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. ii. Property development activities and construction contracts The Group recognises revenue from property development activities/ construction contract by using the stage of percentage of completion method. The stage of completion is determined by the proportion that property development cost/construction cost incurred for work performed to date bear to the estimated total property development costs/construction costs. Property development projects/construction contract and expenses estimates are reviewed and revised periodically as work progresses and as variation orders are approved. Significant judgement is required in determining the stage of completion, the extent of the property development costs/construction costs incurred, the estimated total property development/construction revenue and costs as well as the recoverability of the project/contract undertaken. In making the judgement, the Group evaluates based on past experience and by relying on the work of specialists. 01 43 ANNUAL REPORT 2012 GROMUTUAL BERHAD (Company No. 625034-X)
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Notice of Annual General Meeting - Announcements - Bursa Malaysia

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