REG - UniVision Eng Ltd - Final Results <Origin Href="QuoteRef">UVEL.L</Origin> - Part 2
02/09/2016 16:50
- Part 2: For the preceding part double click ID:nRSB8565Ia
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2016
Attributable to the equity shareholders of the Company
Sharecapital Sharepremium Retained earnings Special capital reserve "A" Specialcapital reserve "B" Statutory surplus reserves Translationreserve Sub-total Non-controlling interest Totalequity
£ £ £ £ £ £ £ £ £ £
(Note 1) (Note 2) (Note 3)
Balance at 1 April 2014 1,697,617 2,192,640 4,927,973 155,876 143,439 7,927 1,670,978 10,796,450 333,269 11,129,719
Comprehensive income:
Profit or loss - - 59,937 - - - - 59,937 52,618 112,555
Other comprehensive income:
Exchange difference arising on translation of foreign operations - - - - - - 18,374 18,374 32,965 51,339
Total other comprehensive income for the year, net of tax - - - - - - 18,374 18,374 32,965 51,339
Total comprehensive income - - 59,937 - - - 18,374 78,311 85,583 163,894
Transfer to statutory surplus reserves - - (6,926) - - 6,926 - - - -
Effect on demerger - - (4,014,851) - - 6,850 (722,990) (4,730,991) - (4,730,991)
De-merger by dividend in specie - - (791,425) - - - - (791,425) - (791,425)
Dividend distributed by a subsidiary - - - - - - - - (26,372) (26,372)
Dividend paid in respect of 2014 year - - (103,561) - - - - (103,561) - (103,561)
Total transactions with owners, recognised directly in equity - - (4,916,763) - - 13,776 (722,990) (5,625,977) (26,372) (5,652,349)
Balance at 31 March 2015 1,697,617 2,192,640 71,147 155,876 143,439 21,703 966,362 5,248,784 392,480 5,641,264
Comprehensive income:
Profit or loss - - (112,211) - - - - (112,211) (228,398) (340,609)
Other comprehensive income:
Exchange difference arising on translation of foreign operations - - - - - - 152,156 152,156 (10,002) 142,154
Total other comprehensive income for the year, net of tax - - - - - - 152,156 152,156 (10,002) 142,154
Total comprehensive income - - (112,211) - - 152,156 39,945 (238,400) (198,455)
Transfer to statutory surplus reserves - - (4,241) - - 4,241 - - - -
Reversal of Translation effect on demerger - - - - - (6,850) 6,850 - - -
Dividend paid in respect of 2015 year - - (128,507) - - - - (128,507) - (128,507)
Total transactions with owners, recognised directly in equity - - (132,748) - - (2,609) 6,850 (128,507) - (128,507)
Balance at 31 March 2016 1,697,617 2,192,640 (173,812) 155,876 143,439 19,094 1,125,368 5,160,222 154,080 5,314,302
The currency translation from Hong Kong Dollars ("HK$") to the presentation currency of Sterling Pound ("£") used in the
financial statements has no impact on the available distributable reserves of the Company at 31 March 2016.
Notes:
1. Share premium
The Company may by resolution reduce the share premium account in any manner authorised and subject to any conditions
prescribed by law.
2. Special capital reserve "A"
Pursuant to the Order of the High Court dated 20 November 2004, any future recoveries of the Company's accumulated
provision for obsolete inventories and provision for bad debts amounting to HK$1,935,002 and HK$3,592,540 respectively will
be credited to non-distributable special capital reserve "A" account.
3. Special capital reserve "B"
By a special resolution passed on 30 July 2004 and Order of the High Court dated 20 November 2004, the authorised and
issued capital of the Company was reduced from HK$159,245,000 divided into 31,849 ordinary shares of HK$5,000 each to
HK$16,405,000 divided into 3,281 ordinary shares of HK$5,000 each. The reduction of capital was effected by cancellation of
28,568 ordinary shares of HK$5,000 each in the issued and paid up share capital of the Company. The Company established a
non-distributable special capital reserve "B" account into which HK$2,071,307 was credited as a result of the capital
reduction.
UNIVISION ENGINEERING LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2016
Attributable to equity shareholders of the Company
Sharecapital Sharepremium Accumulatedlosses Specialcapital reserve "A" Specialcapitalreserve "B" Translationreserve Totalequity
£ £ £ £ £ £ £
(Note 1) (Note 2) (Note 3)
Balance at 1 April 2014 1,697,617 2,192,640 (176,501) 155,876 143,439 309,740 4,322,811
Comprehensive income:
Profit or loss - - 789,219 - - - 789,219
Other comprehensive income:
Exchange difference arising on translation of foreign operations - - - - - 606,238 606,238
Total other comprehensive income for the year, net of tax - - - - - 606,238 606,238
Total comprehensive income - - 789,219 - - 606,238 1,395,457
Demerger by dividend in specie - - (791,425) - - - (791,425)
Dividend paid in respect of 2014 year - - (103,561) - - - (103,561)
Total transactions with owners, recognised directly in equity - - (894,986) - - - (894,986)
Balance at 31 March 2015 1,697,617 2,192,640 (282,268) 155,876 143,439 915,978 4,823,282
Comprehensive income:
Profit or loss - - 171,767 - - - 171,767
Other comprehensive income:
Exchange difference arising on translation of foreign operations - - - - - 146,832 146,832
Total other comprehensive income for the year, net of tax - - - - - 146,832 146,832
Total comprehensive income - - 171,767 - - 146,832 318,599
Dividend paid in respect of 2015 year - - (128,507) - - - (128,507)
Total transactions with owners, recognised directly in equity - - (128,507) - - - (128,507)
Balance at 31 March 2016 1,697,617 2,192,640 (239,008) 155,876 143,439 1,062,810 5,013,374
The currency translation from Hong Kong Dollars ("HK$") to the presentation currency of Sterling Pound ("£") used in the
financial statements has no impact on the available distributable reserves of the Company at 31 March 2016.
Notes:
1. Share premium
The Company may by resolution reduce the share premium account in any manner authorised and subject to any conditions
prescribed by law.
2. Special capital reserve "A"
Pursuant to the Order of the High Court dated 20 November 2004, any future recoveries of the Company's accumulated
provision for obsolete inventories and provision for bad debts amounting to HK$1,935,002 and HK$3,592,540 respectively will
be credited to non-distributable special capital reserve "A" account.
3. Special capital reserve "B"
By a special resolution passed on 30 July 2004 and Order of the High Court dated 20 November 2004, the authorised and
issued capital of the Company was reduced from HK$159,245,000 divided into 31,849 ordinary shares of HK$5,000 each to
HK$16,405,000 divided into 3,281 ordinary shares of HK$5,000 each. The reduction of capital was effected by cancellation of
28,568 ordinary shares of HK$5,000 each in the issued and paid up share capital of the Company. The Company established a
non-distributable special capital reserve "B" account into which HK$2,071,307 was credited as a result of the capital
reduction.
UNIVISION ENGINEERING LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 March 2016
Notes 2016 2015
£ £
Cash flows from operating activities
Profit before income tax 137,711 33,016
Adjustments for:
Interest expense 12 1,234 1,149
Interest income 8 (959) (868)
Depreciation of plant and equipment 16 16,546 14,605
Impairment loss recognised on other receivables 21,470 (727,046)
Impairment loss on goodwill 25,830 -
Loss on disposal of plant and equipment 9 - 38
201,832 (679,106)
Changes inoperating assets and liabilities:
Decrease/(increase) in inventories 111,894 (4,750)
(Increase)/decrease in tradeand other receivables (457,008) 199,516
Increase in trade and other payables 65,846 582,765
Net cash (used in)/generated from operations (77,436) 98,425
Net cash generated from disposal group 31 99,200 229,339
Net cash generated from operating activities 21,764 327,764
Cash flows from investing activities
Interest received 8 959 868
Purchase of plant and equipment (25,558) (26,886)
Increase in bank deposit (180,842) -
Proceeds from disposal of plant and equipment - 480
Net cash used in disposal group 31 (9,603) (8,475)
Net cash used ininvesting activities (215,044) (34,013)
Cash flows from financing activities
Interest paid 12 (1,234) (1,149)
Dividend paid to shareholders of the Company 15 (128,507) (95,137)
Repayment of finance lease liabilities (7,588) (7,068)
Net cash generated from disposal group 31 51,429 518,555
Net cash (used in)/generated from financing activities (85,900) 415,201
Net (decrease)/increase in cash and cash equivalents (279,180) 708,952
Cash and cash equivalents at beginning of year 1,221,707 379,860
Less: cash and cash equivalents from disposal group classified as held for sale 31 (300,527) -
Effect of foreign exchange rate changes 12,244 132,895
Cash and cash equivalents at end of year 22 654,244 1,221,707
UNIVISION ENGINEERING LIMITED
COMPANY STATEMENT OF CASH FLOWS
For the year ended 31 March 2016
Notes 2016 2015
£ £
Cash flows from operating activities
Profit before income tax 171,768 789,219
Adjustments for:
Interest expense 1,233 1,149
Interest income (959) (869)
Depreciation of plant and equipment 16 16,546 14,605
Loss on disposal of plant and equipment - 38
Impairment loss recognised on other receivables 21,470 (727,046)
210,058 77,096
Changes in operating assets and liabilities:
Decrease/(increase) in inventories 111,894 (4,750)
(Increase)/decrease in trade and other receivables (457,008) 199,516
Decrease in amount due from a former subsidiary 8,154 28,302
Increase in trade and other payables 65,846 582,765
Net cash (used in)/generated from operating activities (61,056) 882,929
Cash flows from investing activities
Interest received 959 869
Purchase of plant and equipment (25,558) (26,886)
Increase in bank deposit (180,842) -
Proceeds from disposal of plant and equipment - 480
Net cash used in investing activities (205,441) (25,537)
Cash flows from financing activities
Interest paid (1,233) (1,149)
Dividend paid to shareholders of the Company (128,507) (95,137)
Repayment of finance lease liabilities (7,588) (7,068)
Net cash used in financing activities (137,328) (103,354)
Net (decrease)/increase in cash and cash equivalents (403,825) 754,038
Cash and cash equivalents at beginning of year 1,044,484 160,210
Effect of foreign exchange rate changes 13,585 130,236
Cash and cash equivalents at end of year 22 654,244 1,044,484
1. GENERAL
UniVision Engineering Limited ("the Company") is incorporated in Hong Kong with limited liability and its shares are listed
on the Alternative Investment Market of the London Stock Exchange ("AIM"). The address of the registered office is Unit
1A, 2/F., Sunbeam Centre, 27 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong.
The financial statements are presented in Sterling Pound ("£"), which is the presentation currency of the Company.
The Company and its subsidiary (hereinafter collectively referred to as the "Group") are mainly engaged in the supply,
design, installation and maintenance of closed circuit television and surveillance systems and the sale of security system
related products. The principal activities of its subsidiary are set out in note 18 to the financial statements.
2. BASIS OF PREPARATION
The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRSs") as
issued by the International Accounting Standards Board ("IASB").
The financial statements have been prepared under the historical cost convention basis, as modified by the revaluation of
financial assets and liabilities at fair value through profit or loss.
The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The
estimates and associated assumptions are based on historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of
assets and liabilities that are not readily apparent from other sources. 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 if the revision affects only that period, or in the period of the revision
and future periods if the revision affects both current and future periods.
Judgements made by management in the application of IFRSs that have significant effect on the financial statements and
major sources of estimation uncertainty are discussed in note 5 in the financial statements.
3. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRSs")
(a) New and revised IFRSs that have been issued and effective
The following standards have been adopted by the Group and the Company for the first time for the year ended 31 March
2016:
- Amendments to IAS 19 "Employee benefits: Defined benefit plans: Employee contribution" introduce a relief to reduce
the complexity of accounting for certain contributions from employees or third parties under defined benefit plans. When
the contributions are eligible for the practical expedient provided by the amendments, a company is allowed to recognise
the contributions as a reduction of the service cost in the period in which the related service is rendered, instead of
including them in calculating the defined benefit obligation. The amendments do not have an impact on these financial
statements.
- Annual improvements to IFRSs 2010-2012 cycle and 2011-2013 cycle contain amendments to nine standards with
consequential amendments to other standards. Among them, IAS 24 "Related party disclosures" has been amended to expand the
definition of a "related party" to include a management entity that provides key management personnel services to the
reporting entity, and to require the disclosure of the amounts incurred for obtaining the key management personnel services
provided by the management entity.
(b) New and revised IFRSs that have been issued but are not yet effective
The following new and revised IFRSs, potentially relevant to the Group's and the Company's operations, have been issued and
are mandatory for adoption by the Group and the Company for accounting periods beginning on or after 1 January 2016 or
later periods. However, the Group and the Company have not early adopted them.
• IFRS 9 (2014) "Financial instruments"
• IFRS 15 "Revenue from contracts with customers"
• Amendments to IFRS 11 "Accounting for acquisitions of interests in joint operations"
• Amendments to IAS 16 and IAS 38 "Clarification of acceptable methods of depreciation and amortisation"
• Amendments to IFRS 10 and IAS 28 "Sale or contribution of assets between an investor and its associate or joint
venture"
• Annual improvements to IFRSs 2012-2014 cycle
The Group and the Company have not applied any new or revised IFRSs that are not yet effective for the accounting year
ended 31 March 2016.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
4.1 Basis of consolidation
(a) Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an
entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date on which
control is transferred to the Group. They are deconsolidated from the date that control ceases. Inter-company transactions,
balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also
eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the Group.
The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for
the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity
interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting
from a contingent consideration arrangement. Acquisition related costs are expensed as incurred. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair
values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest
in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree's net
assets.
Changes in the Group's interests in a subsidiary that do not result in a loss of control are accounted for as equity
transactions, whereby adjustments are made to the amounts of controlling and non-controlling interests within consolidated
equity to reflect the change in relative interests, but no adjustments are made to goodwill and no gain or loss is
recognised.
(b) Separate financial statements
In the individual Company's statement of financial position, interests in subsidiaries are accounted for at cost less
impairment loss. Cost includes direct attributable costs of investment. The results of subsidiaries are accounted for by
the Company on the basis of dividend received and receivable.
Impairment testing of the interests in subsidiaries is required upon receiving a dividend from these investments if the
dividend exceeds the total comprehensive income of the subsidiary for the period the dividend is declared or, if the
carrying amount of investment in the separate financial statements exceeds the carrying amount in the consolidated
financial statements, of the investee's net assets including goodwill.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
4.1 Basis of consolidation (continued)
(c) Non-controlling interests
Non-controlling interests represent the equity in a subsidiary not attributable directly or indirectly to the Company, and
in respect of which the Group has not agreed any additional terms with the holders of those interests which would result in
the Group as a whole having a contractual obligation in respect of those interests that meets the definition of a financial
liability. For each business combination, the Group can elect to measure any non-controlling interests either at fair value
or at the non-controlling interest's proportionate share of the subsidiary's net identifiable assets.
Non-controlling interests are presented in the consolidated statement of financial position within equity, separately from
equity attributable to the equity shareholders of the Company. Non-controlling interests in the results of the Group are
presented on the face of the consolidated statement of comprehensive income as an allocation of the total profit or loss
and total comprehensive income for the year between non-controlling interests and the equity shareholders of the Company.
4.2 Segment reporting
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and
incurs expenses, including revenues and expenses that relate to transactions with other components of the Group. Operating
segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker.
The Group's Executive Director, Mr. Stephen Sin Mo KOO is responsible for allocating resources and assessing performance of
the operating segments.
4.3 Foreign currency
(a) Functional and presentation currency
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary
economic environment in which the entity operates ("the functional currency"). The Consolidated and Company financial
statements are presented in Sterling Pound ("£"), which is the Group's presentation currency. As the Company is listed on
AIM, the directors consider that this presentation is more useful for its current and potential investors.
The functional currency of the Group's entities is summarised as follows:
1. UniVision Engineering Limited Hong Kong Dollars ("HK$")
2. T-Com Technology Co. Limited New Taiwan Dollars ("NTD")
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
4.3 Foreign currency (continued)
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the statement of comprehensive income, except when deferred in other
comprehensive income as qualifying cash flow hedges and qualifying net investment hedges.
Foreign exchange gains and losses that relate to borrowings and cash and bank balances are presented in the statement of
comprehensive income within "finance income or cost". All other foreign exchange gains and losses are presented in the
statement of comprehensive income within "administrative expense" or "other income".
Changes in the fair value of monetary securities denominated in foreign currency classified as available for sale are
analysed between translation differences resulting from changes in the amortised cost of the security and other changes in
the carrying amount of the security. Translation differences in respect of changes in amortised cost are recognised in
profit or loss, and other changes in carrying amount are recognised in other comprehensive income.
Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit
or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary
financial assets, such as equities classified as available for sale, are included in other comprehensive income.
(c) Group companies
The results and financial position of all the Group's entities (none of which has the currency of a hyper-inflationary
economy) that have a functional currency different from the presentation currency are translated into the presentation
currency as follows:
(i) assets and liabilities for each statement of financial position presented are translated at the closing rate at
the end of the reporting period;
(ii) income and expenses for each statement of comprehensive income are translated at average exchange rates (unless
this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates,
in which case income and expenses are translated at the rate on the dates of the transactions); and
(iii) all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of
loan and borrowings and other currency instruments designated as hedges of such investments, are taken to other
comprehensive income. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in
equity are recognised in the statement of comprehensive income as part of the gain or loss on sale. Goodwill and fair value
adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
4.4 Plant and equipment
Plant and equipment is initially recognised at cost and subsequently carried at cost less accumulated depreciation and
accumulated impairment loss. The cost of an asset comprises its purchase price and any directly attributable costs of
bringing the asset to working condition for its intended use.
On disposal of an item of plant and equipment, the difference between the net disposal proceeds and its carrying amount is
taken to profit or loss.
Depreciation is calculated using the straight-line method to allocate their depreciable amounts over the estimated useful
lives as follows:
Furniture and fixtures 3 - 5 years
Computer equipment 2 - 5 years
Motor vehicles 3 years
Research assets 3 - 5 years
Fully depreciated plant and equipment is retained in the financial statements until the items are no longer in use and no
further charge for depreciation is made in respect of these assets.
The residual values, useful life and depreciation method are reviewed at the end of each reporting period to ensure that
the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of
consumption of the future economic benefits embodied in the items of plant and equipment. The effects of any revision are
recognised in profit or loss when the changes arise.
Subsequent expenditure relating to plant and equipment that has already been recognised is added to the carrying amount of
the asset only when it is probable that future economic benefits associated with the item will flow to the Group and the
cost of the item can be measured reliably. All other repair and maintenance expenses are recognised in profit or loss when
incurred.
4.5 Goodwill
Goodwill represents the excess of:
(a) the aggregate of the fair value of the consideration transferred, the amount of any non-controlling interest in the
acquiree and the fair value of the Group's previously held equity interest in the acquiree; over
(b) the net fair value of the acquiree's identifiable assets and liabilities measured as at the acquisition date.
When (b) is greater than (a), then this excess is recognised immediately in profit or loss as a gain on a bargain
purchase.
Goodwill is stated at cost less accumulated impairment losses. Goodwill arising on a business combination is allocated to
each cash-generating unit, or groups of cash generating units, that is expected to benefit from the synergies of the
combination and is tested annually for impairment. On disposal of a cash generating unit during the year, any attributable
amount of purchased goodwill is included in the calculation of the profit or loss on disposal.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
4.6 Impairment of assets
The carrying amounts of non-current assets, such as plant and equipment, are reviewed at the end of each reporting period
to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount is
estimated. In addition, for goodwill, the recoverable amount is estimated annually whether or not there is any indication
of impairment.
Calculation of recoverable amount
The recoverable amount of an asset is the greater of its fair value less costs of disposal 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. Where an asset does not
generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest
group of assets that generates cash inflows independently (i.e. a cash-generating unit).
Recognition of impairment losses
An impairment loss is recognised in profit or loss if the carrying amount of an asset, or the cash-generating unit to which
it belongs, exceeds the recoverable amount. Impairment losses recognised in respect of cash-generating units are allocated
first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (or group of units) and then, to
reduce the carrying amount of the other assets in the unit (or group of units) on a pro rata basis, except that the
carrying value of an asset will not be reduced below its individual fair value less costs of disposal (if measurable), or
value in use (if determinable).
Reversals of impairment losses
In respect of assets other than goodwill, an impairment loss is reversed if there has been a favourable change in the
estimates used to determine the recoverable amount. An impairment loss in respect of goodwill is not reversed (including
those provided during the interim financial reporting).
A reversal of an impairment loss is limited to the asset's carrying amount that would have been determined had no
impairment loss been recognised in prior years. Reversals of impairment losses are credited to profit or loss in the year
in which the reversals are recognised.
4.7 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method
and comprises design costs, raw materials, direct labour, other direct costs and other costs incurred in bringing the
inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary
course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
4.8 Financial instruments
Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions
of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities are added to or deducted from the
fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.
4.8.1 Financial assets
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. Subsequent to initial recognition, loans and receivables (including trade and other receivables and bank
balances and cash) are measured at amortised cost using the effective interest method, less any impairment (see accounting
policy on impairment of loans and receivables below).
Interest income is recognised by applying the effective interest rate, except for short-term receivables where the
recognition of interest would be immaterial.
Type of item Nature and terms of item
1. Bills receivable Certain customers pay accounts receivable with bills receivable from Taiwan banks with maturities less than twelve months. These are also referred to as "bankers" acceptances, which are unsecured, interest-free and to be matured in twelve months.
2. Loans Unsecured temporary advances to the subsidiary, which are interest-free and eliminated upon consolidation.
3. Other receivables They include:
a. Retention receivable under warranty provision among certain construction contracts for a period of twelve months
b. Accrued income from maintenance contracts, which are billed or collected within twelve months.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
4.8 Financial instruments (continued)
4.8.1 Financial assets (continued)
Impairment of loans and receivables
Loans and receivables are assessed for indicators of impairment at the end of each reporting period. Loans and receivables
are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after
the initial recognition of the loans and receivables, the estimated future cash flows of loans and receivables have been
affected.
Objective evidence of impairment could include:
• significant financial difficulty of the issuer or counterparty; or
• breach of contract, such as default or delinquency in interest and principal payments; or
• it becoming probable that the borrower will enter bankruptcy or financial re-organisation.
For certain categories of loans and receivables, such as trade receivables, assets that are assessed not to be impaired
individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a
portfolio of receivables could include the Group's past experience of collecting payments, an increase in the number of
delayed payments in the portfolio past the average credit period and observable changes in national or local economic
conditions that correlate with default on receivables.
The amount of the impairment loss recognised is the difference between the asset's carrying amount and the present value of
the estimated future cash flows discounted at the loans and receivables' original effective interest rate.
The carrying amount of loans and receivables is reduced by the impairment loss directly for all loans and receivables with
the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account.
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