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XYZ Holdings (Singapore) Limited Illustrative financial statements for the year ended 31 December 2015

XYZ Holdings (Singapore) Limited - EYFILE/ey-xyz-holdings-singapore-limited-2015.pdf · XYZ Holdings (Singapore) Limited Preface About this publication XYZ Holdings (Singapore) Limited

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Page 1: XYZ Holdings (Singapore) Limited - EYFILE/ey-xyz-holdings-singapore-limited-2015.pdf · XYZ Holdings (Singapore) Limited Preface About this publication XYZ Holdings (Singapore) Limited

XYZ Holdings(Singapore)LimitedIllustrative financialstatements for the yearended 31 December 2015

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This page has been left blank intentionally.

Page 3: XYZ Holdings (Singapore) Limited - EYFILE/ey-xyz-holdings-singapore-limited-2015.pdf · XYZ Holdings (Singapore) Limited Preface About this publication XYZ Holdings (Singapore) Limited

XYZ Holdings (Singapore) Limited

Preface

About this publication

XYZ Holdings (Singapore) Limited

This publication includes the following components:

§ XYZ Holdings (Singapore) Limited (XYZ) – Illustrative report on new directors’statement, and financial statements

§ Appendix A – Additional illustrative disclosures§ Appendix B – Illustrative new auditor’s report§ Appendix C – Comparison between Financial Reporting Standards and International

Financial Reporting Standards

The illustrative financial statements are an illustration of the annual financial statements of aSingapore-incorporated listed company, XYZ Holdings (Singapore) Limited, prepared inaccordance with:

§ Singapore Financial Reporting Standards§ The Singapore Companies Act, Chapter 50.

The illustrative financial statements serve to provide illustration of annual consolidatedfinancial statements of a group of companies whose activities include manufacturing,property development and investment holding. The disclosures contained in these illustrativefinancial statements are made based on a hypothetical group of entities and certainassumptions have been made about the applicability of the disclosures required by SingaporeFinancial Reporting Standards. In addition to the aforementioned standards and regulation,certain disclosure requirements of the Singapore Exchange Securities Trading Limited’s(SGX-ST) Listing Manual have also been included in these illustrative financial statements.Readers should note that the disclosure requirements of the SGX-ST may be included in otherparts of the entity’s annual report instead.

The illustrative financial statements is designed to capture a wide set of circumstances andtransactions which may not be relevant to all entities. Disclosures illustrated are those thatare relevant to the circumstance of XYZ. Also, since XYZ is a fictitious entity, assessingmateriality is not possible in some circumstances. XYZ is a helpful enabler for entitiespreparing financial statements under FRS, but its illustrative nature must be appreciated.

This 2015 edition includes illustration of disclosures which are effective for annual periodsbeginning on or after 1 January 2015. Also included is additional illustration of the newauditor’s report that will be effective in 2016.

To provide users with insight of changes in this publication as compared to the 2014 edition,we have side-lined the new illustrations, disclosure requirements and other editorial changesin this manner.

Important notices

· This publication is intended as an illustrative guide rather than a definitivestatement.

· While the illustrative financial statements contain most of the usual disclosurestypically found in the financial statements of a group of companies whose activitiesinclude manufacturing, property development and investment holding, thedisclosures and commentaries in this publication are not meant to be exhaustive.Reference should be made to the relevant standards and regulations for specificdisclosure requirements.

· This publication should not be relied upon as a substitute for seeking professionaladvice concerning the appropriate accounting treatment for specific individualsituations or ensuring compliance with the Singapore Financial Reporting Standardsand/or Singapore Companies Act, Chapter 50.

Page 4: XYZ Holdings (Singapore) Limited - EYFILE/ey-xyz-holdings-singapore-limited-2015.pdf · XYZ Holdings (Singapore) Limited Preface About this publication XYZ Holdings (Singapore) Limited

XYZ Holdings (Singapore) Limited

Preface

Singapore Financial Reporting Standards (FRS)

For financial periods beginning on or after 1 January 2015, a number of new and revisedFRSs apply.

A list of the FRSs and INT FRS is provided in Appendix B, which also provides a brief summaryof the major differences with International Financial Reporting Standards (IFRS).

This publication reflects the requirements of the FRSs issued as at 31 August 2015. No newaccounting standards that would be applicable to financial statements covering periodsbeginning on 1 January 2015 are expected. Nevertheless, the situation needs to bemonitored for any developments that may affect 2015 financial statements.

The following FRSs have not been dealt with in this publication:

· FRS 26 Accounting and Reporting by Retirement Benefit Plans· FRS 29 Financial Reporting in Hyperinflationary Economies· FRS 34 Interim Financial Reporting· FRS 41 Agriculture· FRS 101 First-time Adoption of Financial Reporting Standards· FRS 104 Insurance Contracts· FRS 106 Exploration for and Evaluation of Mineral Resources· FRS 114 Regulatory Deferral Accounts· INT FRS 112 Service Concession Arrangements· INT FRS 113 Customer Loyalty Programmes· INT FRS 117 Distributions of Non-Cash Assets to Owners· INT FRS 118 Transfer of Assets from Customers· INT FRS 120 Stripping Costs in the Production of a Surface Mine· INT FRS 121 Levies

Page 5: XYZ Holdings (Singapore) Limited - EYFILE/ey-xyz-holdings-singapore-limited-2015.pdf · XYZ Holdings (Singapore) Limited Preface About this publication XYZ Holdings (Singapore) Limited

XYZ Holdings (Singapore) Limited

Preface

Singapore Financial Reporting Standards (FRS) (continued)

Abbreviations

The following abbreviations are used in this publication:

BC Basis for ConclusionsCA Singapore Companies Act, Chapter 50FRS Singapore Financial Reporting Standards

– INT FRS Interpretations of FRSs– FRS AG FRS Application Guidance– FRS IG FRS Implementation Guidance

IAS International Accounting StandardsIFRS International Financial Reporting StandardsSSA Singapore Standards on AuditingSGX Singapore Exchange Securities Trading Limited (SGX-ST)’s Listing Manual

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XYZ Holdings (Singapore) Limited

ContentsPage

General information .............................................................................................................. 1

Directors’ statement ............................................................................................................. 2

Independent auditor’s report ............................................................................................... . 7

Consolidated income statement ............................................................................................. 9

Consolidated statement of comprehensive income ............................................................ ....10

Balance sheets………………… ................................................................................................ ...15

Statements of changes in equity .......................................................................................... 17

Consolidated cash flow statement ........................................................................................ 25

Notes to the financial statements

1. Corporate information ................................................................................................. 29

2. Summary of significant accounting policies ................................................................... 29

2.1 Basis of preparation ........................................................................................... 29

2.2 Changes in accounting policies............................................................................ 31

2.3 Standards issued but not yet effective…. ....................................................... ……..31

2.4 Basis of consolidation and business combinations ................................................ 34

2.5 Transactions with non-controlling interests.......................................................... 38

2.6 Foreign currency ............................................................................................... 38

2.7 Property, plant and equipment ........................................................................... 39

2.8 Investment properties ........................................................................................ 40

2.9 Intangible assets ................................................................................................ 42

2.10 Land use rights .................................................................................................. 43

2.11 Impairment of non-financial assets ...................................................................... 44

2.12 Subsidiaries ....................................................................................................... 44

2.13 Joint arrangements ........................................................................................... 45

2.14 Joint ventures and associates ............................................................................. 46

2.15 Financial instruments ......................................................................................... 48

2.16 Impairment of financial assets ............................................................................ 53

2.17 Cash and cash equivalents .................................................................................. 55

2.18 Construction contracts ....................................................................................... 55

2.19 Development properties ..................................................................................... 55

2.20 Inventories ........................................................................................................ 56

2.21 Provisions ......................................................................................................... 57

2.22 Government grants ............................................................................................ 58

2.23 Financial guarantee ........................................................................................... 58

2.24 Borrowing costs ................................................................................................. 59

2.25 Convertible redeemable preference shares .......................................................... 59

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XYZ Holdings (Singapore) Limited

ContentsPage

Notes to the financial statements (continued)

2.26 Employee benefits ............................................................................................. 60

2.27 Leases .............................................................................................................. 63

2.28 Non-current assets held for sale and discontinued operations ............................... 63

2.39 Revenue ........................................................................................................... 64

2.30 Taxes ................................................................................................................ 65

2.31 Share capital and share issuance expenses .......................................................... 67

2.32 Treasury shares ................................................................................................. 67

2.33 Contingencies ............................................................................................ ........67

3. Significant accounting judgements and estimates .......................................................... 68

3.1 Judgements made in applying accounting policies ................................................ 68

3.2 Key sources of estimation uncertainty ................................................................. 70

4. Revenue ............ ........................................................................................................ 73

5. Interest income ........................................................................................................... 73

6. Other income .............................................................................................................. 73

7. Finance costs .............................................................................................................. 74

8. Other expenses ........................................................................................................... 74

9. Profit before tax from continuing operations ................................................................. 75

10. Income tax expense ..................................................................................................... 77

11. Discontinued operation and disposal group classified as held for sale .............................. 80

12. Earnings per share ...................................................................................................... 83

13. Property, plant and equipment ..................................................................................... 85

14. Investment properties.................................................................................................. 88

15. Intangible assets ......................................................................................................... 90

16. Land use rights ........................................................................................................... 95

17. Investment in subsidiaries ............................................................................................ 95

18. Investment in joint venture ........................................................................................ 109

19. Investment in associates ............................................................................................ 112

20. Deferred tax ............................................................................................................. 115

21. Trade and other receivables ....................................................................................... 117

22. Investment securities ................................................................................................. 123

23. Gross amount due from/(to) customers for contract work-in-progress ........................... 124

24. Development properties ............................................................................................. 125

25. Inventories …………………….... ........................................................................................ 126

26. Derivatives ............................................................................................................... 127

27. Cash and short-term deposits ..................................................................................... 128

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XYZ Holdings (Singapore) Limited

ContentsPage

Notes to the financial statements (continued)

28. Provisions ................................................................................................................. 129

29. Deferred capital grants .............................................................................................. 130

30. Loans and borrowings ................................................................................................ 131

31. Trade and other payables ........................................................................................... 134

32. Other liabilities .......................................................................................................... 135

33. Share capital and treasury shares ............................................................................... 136

34. Other reserves ........................................................................................................... 137

35. Employee benefits ..................................................................................................... 138

36. Related party transactions ......................................................................................... 141

37. Commitments ........................................................................................................... 143

38. Contingencies ............................................................................................................ 147

39. Fair value of assets and liabilities ................................................................................ 148

40. Financial risk management objectives and policies ........................................................ 165

41. Capital management .................................................................................................. 179

42. Segment information ................................................................................................. 181

43. Dividends ................................................................................................................. 186

44. Events occurring after the reporting period ................................................................. 187

45. Authorisation of financial statements for issue ............................................................ 187

Appendices

Appendix A-1 Consolidated statement of comprehensive income in one statement –

Illustrating the analysis of expense by nature ................................................ 188

Appendix A-2 Hedge accounting ....................................................................................... 190

Appendix A-3 Agreements for the construction of real estate ............................................. 197

Appendix A-4 Defined benefit plans ................................................................................... 201

Appendix B Illustrative new auditor’s report ................................................................... 212

Appendix C Comparison between FRS and IFRS .............................................................. 214

Page 9: XYZ Holdings (Singapore) Limited - EYFILE/ey-xyz-holdings-singapore-limited-2015.pdf · XYZ Holdings (Singapore) Limited Preface About this publication XYZ Holdings (Singapore) Limited

Co. Reg. No 123456789Z

XYZ Holdings (Singapore) Limitedand its subsidiariesIllustrative financial statementsfor the financial year ended 31 December 2015

The names of people and corporations included as illustrations are fictitious. Any resemblance toany person or business is purely coincidental.

Page 10: XYZ Holdings (Singapore) Limited - EYFILE/ey-xyz-holdings-singapore-limited-2015.pdf · XYZ Holdings (Singapore) Limited Preface About this publication XYZ Holdings (Singapore) Limited

XYZ Holdings (Singapore) Limited and its subsidiaries

General information

XYZ Holdings (Singapore) Limited | 1

Gneral information

DirectorsAng Beng Choo – Chairman

De Silva Elizabeth Frances – Chief Executive Officer

Goh Hock Inn

Jee Kim Leng

Musa Nasir Osman

Pek Que Ru

See Tong Tong

Company secretaryLee Yiew Hong

Registered office[Address, telephone number, facsimile number and electronic mail address (if any)]

SolicitorsLaura & Co. LLP

BankersGood Bank Limited

South Bank Limited

CPA Bank Limited

Share registrar[Address]

AuditorErnst & Young LLP

One Raffles Quay

North Tower, Level 18

Singapore 048583

Partner in charge: Alex Yang (Date of appointment: since financial year ended 31 December

2014)

SGX 1207.1

SGX 1207.2

SGX 1207.3

SGX 713.1

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XYZ Holdings (Singapore) Limited and its subsidiaries

Directors’ statement �

XYZ Holdings (Singapore) Limited | 2

The directors are pleased to present their statement to the members together with the auditedconsolidated financial statements of XYZ Holdings (Singapore) Limited (the Company) and itssubsidiaries (collectively, the Group) and the balance sheet and statement of changes in equityof the Company for the financial year ended 31 December 2015.

1. Opinion of the directors

In the opinion of the directors,

(i) the consolidated financial statements of the Group and the balance sheets � andstatement of changes in equity of the Company are drawn up so as to give a true andfair view of the financial position of the Group and of the Company as at 31December 2015 and the financial performance, changes in equity and cash flows ofthe Group and changes in equity of the Company � for the year ended on that date;and

(ii) at the date of this statement there are reasonable grounds to believe that theCompany will be able to pay its debts as and when they fall due.

2. Directors

The directors of the Company in office at the date of this statement are:

Ang Beng Choo

De Silva Elizabeth Frances (appointed on 2 February 2015)

Goh Hock Inn

Jee Kim Leng

Musa Nasir Osman

Pek Que Ru

See Tong Tong

In accordance with Articles 93 and 94 of the Company’s Articles of Association, Jee KimLeng, Pek Que Ru and See Tong Tong retire and, being eligible, offer themselves for re-election.

3. Arrangements to enable directors to acquire shares and debentures

Except as described in paragraph five below, neither at the end of nor at any time duringthe financial year was the Company a party to any arrangement whose objects are, or oneof whose objects is, to enable the directors of the Company to acquire benefits by meansof the acquisition of shares or debentures of the Company or any other body corporate.

CA 201.16

CA Sch 12.1.a

CA Sch 12.1.b

CA Sch 12.7

CA Sch.12.8.aCA Sch.12.8.b

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XYZ Holdings (Singapore) Limited and its subsidiaries

Directors’ statement �

XYZ Holdings (Singapore) Limited | 3

4. Directors’ interests in shares and debentures

The following directors, who held office at the end of the financial year, had, according tothe register of directors’ shareholdings, required to be kept under section 164 of theSingapore Companies Act, Chapter 50, an interest in shares and share options of theCompany and related corporations (other than wholly-owned subsidiaries) as statedbelow:

Direct interest Deemed interest

Name of director

At thebeginning of

financial yearor date of

appointment

At the end offinancial year

At thebeginning of

financial yearor date of

appointment

At the end offinancial year

Ordinary shares of the Company

Goh Hock Inn 340,000 345,000 2,100,000 2,100,000De Silva Elizabeth Frances 5,000 10,000 – –

Share options of the Company

Goh Hock Inn 50,000 60,000 – –De Silva Elizabeth Frances 43,000 60,000 – –

Ordinary shares of £1 each of theholding company (Good Group(International) Ltd)Goh Hock Inn 10,000 10,000 – –

De Silva Elizabeth Frances 25,000 25,000 – –

There was no change in any of the above-mentioned interests in the Company betweenthe end of the financial year and 21 January 2015.

Except as disclosed in this report, no director who held office at the end of the financialyear had interests in shares, share options, warrants or debentures of the Company, or ofrelated corporations, either at the beginning of the financial year, or date of appointmentif later, or at the end of the financial year.

5. Options

At an Extraordinary General Meeting held on 23 December 2009, shareholders approvedthe Senior Executive Option Plan and the General Employee Share Option Plan for thegranting of non-transferable options that are settled by physical delivery of the ordinaryshares of the Company, to eligible senior executives and employees respectively.

The committee administering the employee share option plans comprise three directors,Musa Nasir Osman, Pek Que Ru and See Tong Tong.

During the financial year:

· The Company has granted 37,000 share options under the Senior Executive OptionPlan. These options expire on 30 June 2020 and are exercisable if and when theGroup’s earnings per share amount increases by 12% within three years from thedate of grant.

· The Company has also granted 163,000 share options under the General EmployeeShare Option Plan. These options expire on 30 June 2019 and are exercisable if theemployee remains in service for three years from the date of grant and that certainmarket conditions as detailed in Note 35 to the financial statements are met.

CA Sch 12.9

SGX 1207.7

SGX 853

SGX 852.1.a

CA Sch 12.2

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XYZ Holdings (Singapore) Limited and its subsidiaries

Directors’ statement �

XYZ Holdings (Singapore) Limited | 4

5. Options (continued)

· 75,000 treasury shares were reissued at a weighted average exercise price ofS$1.08 each, upon the exercise of options granted pursuant to the employee shareoption plans.

Details of all the options to subscribe for ordinary shares of the Company pursuant to theemployee share option plans as at 31 December 2015 are as follows:

Expiry date Exercise price (S$) Number of options

31 December 2016 1.05 45,000

30 November 2017 1.18 55,000

1 January 2018 1.22 100,000

31 December 2019 1.26 125,000

30 June 2020 1.30 200,000

Total 525,000

Details of the options to subscribe for ordinary shares of the Company granted todirectors of the Company pursuant to the Senior Executive Option Plan are as follows:

Name of director

Optionsgrantedduring

financialyear

Aggregateoptions granted

sincecommencementof plan to end of

financial year

Aggregate optionsexercised since

commencement ofplan to end offinancial year

Aggregateoptions

outstanding asat end of

financial year

Goh Hock Inn 15,000 105,000 (35,000) 60,000

De Silva Elizabeth Frances 22,000 75,000 (15,000) 60,000

Total 37,0001 180,000 (50,000) 120,000

1 These options are exercisable between the periods from 30 June 2018 to 30 June 2020at the exercise price of S$1.30 if the vesting conditions are met.

Since the commencement of the employee share option plans till the end of the financialyear:

· No options have been granted to the controlling shareholders of the Company and theirassociates

· No participant other than the two directors mentioned above has received 5% or moreof the total options available under the plans

· No options have been granted to directors and employees of the holding company andits subsidiaries

· No options that entitle the holder to participate, by virtue of the options, in any shareissue of any other corporation have been granted

· No options have been granted at a discount

CA Sch 12.5

CA Sch 12.6

SGX 852.1.b.i

SGX 852.2

SGX 852.1.b.ii

SGX 852.1.b.iiSGX 852.c.i

SGX 852.1.c.ii

CA Sch 12.2

SGX 852.1.d

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XYZ Holdings (Singapore) Limited and its subsidiaries

Directors’ statement �

XYZ Holdings (Singapore) Limited | 5

6. Audit committee

The audit committee (AC) carried out its functions in accordance with section 201B (5) �of the Singapore Companies Act, Chapter 50, including the following:

· Reviewed the audit plans of the internal and external auditors of the Group and theCompany, and reviewed the internal auditor’s evaluation of the adequacy of theCompany’s system of internal accounting controls and the assistance given by theGroup and the Company’s management to the external and internal auditors

· Reviewed the quarterly and annual financial statements and the auditor’s report on theannual financial statements of the Group and the Company before their submission tothe board of directors

· Reviewed effectiveness of the Group and the Company’s material internal controls,including financial, operational and compliance controls and risk management viareviews carried out by the internal auditor

· Met with the external auditor, other committees, and management in separateexecutive sessions to discuss any matters that these groups believe should bediscussed privately with the AC

· Reviewed legal and regulatory matters that may have a material impact on the financialstatements, related compliance policies and programmes and any reports receivedfrom regulators

· Reviewed the cost effectiveness and the independence and objectivity of the externalauditor

· Reviewed the nature and extent of non-audit services provided by the external auditor

· Recommended to the board of directors the external auditor to be nominated,approved the compensation of the external auditor, and reviewed the scope and resultsof the audit

· Reported actions and minutes of the AC to the board of directors with suchrecommendations as the AC considered appropriate

· Reviewed interested person transactions in accordance with the requirements of theSingapore Exchange Securities Trading Limited’s Listing Manual

The AC, having reviewed all non-audit services provided by the external auditor to theGroup, is satisfied that the nature and extent of such services would not affect theindependence of the external auditor. The AC has also conducted a review of interestedperson transactions.

The AC convened four meetings during the year with full attendance from all members,except for one where a member was absent. The AC has also met with internal andexternal auditors, without the presence of the Company’s management, at least once ayear.

Further details regarding the AC are disclosed in the Report on Corporate Governance.

7. Auditors

Ernst & Young LLP have expressed their willingness to accept re-appointment as auditors.

CA 201B.9

SGX 1207.6.b

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XYZ Holdings (Singapore) Limited and its subsidiaries

Directors’ statement �

XYZ Holdings (Singapore) Limited | 6

On behalf of the board of directors:

___________________________ ___________________________Ang Beng Choo De Silva Elizabeth FrancesDirector Director27 February 2016

Commentary:

� The Companies (Amendment) Bill was passed by Parliament in October 2014. On 15 April 2015,ACRA announced that the legislative changes to the Companies Act will be effected in twophases. The first phase was implemented on 1 July 2015. The second phase will commence inthe first quarter of 2016.

Included in the first phase is the removal of the directors’ report and introduction of the newdirectors’ statement containing the information set out in the new Twelfth Schedule.

The new section 201(16) of the Companies Act which came into operation on 1 July 2015states that the financial statements laid before a company at its general meeting (including anyconsolidated financial statements annexed to the balance-sheet of a parent company) shall beaccompanied, before the auditor’s report on the financial statements under this Part, by astatement signed on behalf of the directors by two directors of the company containing theinformation set out in the Twelfth Schedule. The adoption of these legislative changes isillustrated in the director’s statement above.

� FRS 1 uses the terms statement of financial position and statement of cash flows. However, anentity is not obliged to use these terminologies.

In this illustration, the Group has chosen to use the terms balance sheet and cash flowstatement. If an entity has chosen to use the terms introduced by FRS 1, the entity should makereference to the new terms used in its financial statements.

� Presentation of the statement of changes in equity for the Company when consolidated financialstatements are presented is optional. In this illustration, the Company has chosen to present thestatement of changes in equity for the Company together with the consolidated financialstatements and balance sheet of the Company. Accordingly, the statement by directors includesthe directors’ opinion on whether the statement of changes in equity is drawn up so as to give atrue and fair view of the changes in equity of the Company. This applies to the auditor’s opinionexpressed in the auditor’s report as well.

Í Section 201B (5) of the Companies Act requires a description of the nature and extent of thefunctions performed by the audit committee pursuant to section 201B (5). If the nature andextent of the functions are described in the Report on Corporate Governance and the Directors’Report makes reference to the Report on Corporate Governance instead, the directors mustensure that the Report on Corporate Governance describes the functions pursuant to section201B (5) of the Companies Act.

CA 201.16

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XYZ Holdings (Singapore) Limited and its subsidiaries

Independent auditor’s reportFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 7

Independent uditors’ report

Independent Auditor’s Report to the Members of XYZ Holdings (Singapore) Limited ÊË

Report on the Financial Statements

We have audited the accompanying financial statements of XYZ Holdings (Singapore) Limited (the“Company”) and its subsidiaries (collectively, the “Group”) set out on pages 9 to 188, which comprise thebalance sheets Ì of the Group and the Company as at 31 December 2015, the statements of changes inequity of the Group and the Company � and the consolidated income statement �, consolidatedstatement of comprehensive income and consolidated cash flow statement � of the Group for the yearthen ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of financial statements that give a true and fair view inaccordance with the provisions of the Singapore Companies Act, Chapter 50 (the “Act”) and SingaporeFinancial Reporting Standards, and for devising and maintaining a system of internal accounting controlssufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthoriseduse or disposition; and transactions are properly authorised and that they are recorded as necessary topermit the preparation of true and fair financial statements and to maintain accountability of assets.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conductedour audit in accordance with Singapore Standards on Auditing. Those standards require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor’s judgment, including the assessmentof the risks of material misstatement of the financial statements, whether due to fraud or error. In makingthose risk assessments, the auditor considers internal control relevant to the entity’s preparation offinancial statements that give a true and fair view in order to design audit procedures that are appropriatein the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’sinternal control. An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for ouraudit opinion.

Opinion

In our opinion, the consolidated financial statements of the Group and the balance sheet� and statementof changes in equity of the Company� are properly drawn up in accordance with the provisions of the Actand Singapore Financial Reporting Standards so as to give a true and fair view of the financial position ofthe Group and of the Company as at 31 December 2015 and of the financial performance, changes inequity and cash flows of the Group and the changes in equity of the Company� for the year ended on thatdate.

Report on Other Legal and Regulatory Requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company and bythose subsidiary corporations incorporated in Singapore of which we are the auditors have been properlykept in accordance with the provisions of the Act.

___________________________

Ernst & Young LLP

Public Accountants andChartered AccountantsSingapore

27 February 2016

SSA 700.22,CA 207.1.aCA 207.1.b

SSA 700.39

SSA 700.23

SSA 700.25

SSA 700.26

SSA 700.28

SSA 700.29 and30

SSA 700.31

SSA 700.33

SSA 700.34

SSA 700.35CA 207.2.a

SSA 700.38

CA 207.2.b

SSA 700.40

SSA 700.42

SSA 700.41

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XYZ Holdings (Singapore) Limited and its subsidiaries

Independent auditor’s reportFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 8

Commentary:

Ê Please refer to commentary no. 1 of the directors’ statement. The Institute of SingaporeChartered Accountants (ISCA) amended its pronouncements relating to auditor’s report to reflectthe terminology changes resulting from the legislative changes made to the Companies Act inOctober 2014. These terminology changes are reflected in this illustrative Independent Auditor’sReport.

Ë The ISCA issued the enhanced Auditor Reporting Standards that deals with the form and contentof the auditor’s report to be issued for audits of financial statements for periods ending on or after15 December 2016 conducted in accordance with Singapore Standards of Auditing (SSA).

An illustration of the enhanced independent auditor’s report is illustrated in Appendix B IllustrativeNew Auditor’s Report.

Ì Please refer to commentary no. 2 of the directors’ statement.

Í In this illustration, the Group has chosen to present its comprehensive income in two linkedstatements. If an entity has chosen to present its comprehensive income in one single statement,the reference to consolidated income statement should be removed.

Î Please refer to commentary no. 3 of the directors’ statement.

Page 18: XYZ Holdings (Singapore) Limited - EYFILE/ey-xyz-holdings-singapore-limited-2015.pdf · XYZ Holdings (Singapore) Limited Preface About this publication XYZ Holdings (Singapore) Limited

XYZ Holdings (Singapore) Limited and its subsidiaries

Consolidated income statement ��For the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 9

(Illustrating the analysis of expenses by function)

Note

2015

$’000

2014

$’000 FRS 1.81.b and 103

Continuing operations�

Revenue 4 136,720 142,571 FRS 1.82.a and 103

Cost of sales (104,271) (111,820) FRS 1.103

Gross profit 32,449 30,751 FRS 1.103

Other items of income� FRS 1.103

Interest income� 5 430 327 FRS 18.35.b.iii

Dividend income from investment securities� 526 406 FRS 18.35.b.v

Other income 6 1,511 886

Other items of expense�

Marketing and distribution (4,895) (4,195) FRS 1.103

Research and development� (320) (327) FRS 1.103, FRS 38.126

Administrative expenses (20,266) (18,952) FRS 1.103

Finance costs 7 (1,715) (1,512) FRS 1.82.b

Other expenses 8 (1,471) (724) FRS 1.103

Share of results of joint ventures 151 128 FRS 1.82.c

Share of results of associates� 657 328 FRS 1.82.c

Profit before tax from continuing operations 9 7,057 7,116 FRS 1.85

Income tax expense 10 (1,557) (1,687) FRS 1.82.d, FRS 12.77

Profit from continuing operations, net of tax 5,500 5,429 FRS 1.85

Discontinued operation�

Loss from discontinued operation, net of tax 11 (544) (188)FRS 1.82.e, FRS 105.33.a& 33A

Profit for the year � 4,956 5,241 FRS 1.81A.a

Attributable to:

Owners of the Company

Profit from continuing operations, net of tax 5,320 5,029 FRS 105.33.d

Loss from discontinued operation, net of tax (544) (188) FRS 105.33.d

Profit for the year attributable to owners of the Company 4,776 4,841 FRS 1.81B.ii

Non-controlling interests

Profit from continuing operations, net of tax 180 400

Loss from discontinued operation, net of tax – –

Profit for the year attributable to non-controlling interests 180 400 FRS 1.81B.i

Earnings per share from continuing operations attributableto owners of the Company (cents per share)

Basic 12(a) 22.98 21.81 FRS 33.66 and 67A

Diluted 12(a) 22.73 21.58 FRS 33.66 and 67A

Earnings per share (cents per share)

Basic 12(b) 20.63 21.00 FRS 33.66 and 67A

Diluted 12(b) 20.43 20.78 FRS 33.66 and 67A

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

Page 19: XYZ Holdings (Singapore) Limited - EYFILE/ey-xyz-holdings-singapore-limited-2015.pdf · XYZ Holdings (Singapore) Limited Preface About this publication XYZ Holdings (Singapore) Limited

XYZ Holdings (Singapore) Limited and its subsidiaries

Consolidated statement of comprehensive incomeFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 10

Consolidated statement of comprehensive income 2015

$’000

2014

$’000

Profit for the year 4,956 5,241 FRS 1.82.f

Other comprehensive income:��

Items that will not be reclassified to profit or loss FRS 1.82A.b

Net surplus on revaluation of freehold land and buildings 1,250 2,404 FRS 16.77.f

Share of gain on property revaluation of associates� 62 10

1,312 2,414

Items that may be reclassified subsequently to profit or loss FRS 1.82A.a

Net fair value gains on available-for-sale financial assets 274 110 FRS 107.20.a.ii

Net fair value changes on available-for-sale financial assetsreclassified to profit or loss (100) (12) FRS 107.20.a.ii

Foreign currency translation (181) (82) FRS 21.52.b

(7) 16

Other comprehensive income for the year, net of tax 1,305 2,430 FRS 1.81A.b

Total comprehensive income for the year� 6,261 7,671 FRS 1.81A.c

Attributable to:

Owners of the Company 6,091 7,211 FRS 1.81B.b.ii

Non-controlling interests 170 460 FRS 1.81B.b.i

Total comprehensive income for the year 6,261 7,671

Attributable to:

Owners of the CompanyTotal comprehensive income from continuing operations,

net of tax 6,585 7,379 FRS 105.33.d Total comprehensive income from discontinued operation,

net of tax (494) (168) FRS 105.33.d

Total comprehensive income for the year attributable toowners of the Company 6,091 7,211

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

Page 20: XYZ Holdings (Singapore) Limited - EYFILE/ey-xyz-holdings-singapore-limited-2015.pdf · XYZ Holdings (Singapore) Limited Preface About this publication XYZ Holdings (Singapore) Limited

XYZ Holdings (Singapore) Limited and its subsidiaries

Consolidated statement of comprehensive incomeFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 11

Commentary:

Complete set of financial statements

Ê Under FRS 1, a complete set of financial statements comprises:

(a) A statement of financial position as at the end of the period*

(b) A statement of profit or loss and other comprehensive income for the period

(c) A statement of changes in equity for the period

(d) A statement of cash flows for the period*

(e) Notes, comprising a summary of significant accounting policies and other explanatoryinformation

(f) Comparative information in respect of the preceding period**

(g) A statement of financial position as at the beginning of the earliest comparative period when anentity applies an accounting policy retrospectively or makes a retrospective restatement ofitems in its financial statements, or when it reclassifies items in its financial statements***

* FRS 1 replaces the term balance sheet with statement of financial position, and cash flowstatement with statement of cash flows. However, an entity is not obliged to use these newtitles.

** An entity shall present, as a minimum, two statements of financial position, two statements ofprofits or loss and other comprehensive income, two separate statements of profit or loss (ifpresented), two statements of cash flows and two statements of changes in equity, and relatednotes. This shall include comparative information for narrative and descriptive information if itis relevant to understanding the current period’s financial statements.

*** In such cases, a complete set of financial statements will include three statements of financialposition.

Presentation of statement of profit or loss and other comprehensive income and analysis of expenses

� An entity can present a single statement of profit or loss and other comprehensive income, withprofit or loss and other comprehensive income in two sections or as two linked statements.

When an entity present a single statement of profit or loss and other comprehensive income, withprofit or loss and other comprehensive income in two sections, the sections shall be presentedtogether, with the profit or loss section presented first followed directly by the other comprehensiveincome section. When an entity present the profit or loss section in a separate statement of profit orloss, the separate statement of profit or loss shall immediately precede the statement ofcomprehensive income, which shall begin with profit or loss.

An entity shall present an analysis of expenses using a classification based on either the nature ofexpenses or their function within the entity, whichever provides information that is reliable and morerelevant. The main consideration in choosing an appropriate analysis for disclosure purposes shouldbe the entity’s accounting system and management reporting system.

In this illustration, the format adopted is two linked statements with analysis of expenses by theirfunction within the entity. An illustration of a statement of comprehensive income in a singlestatement with analysis of expenses by their nature is provided in Appendix A-1 Consolidatedstatement of comprehensive income in one statement – illustrating the analysis of expenses bynature. Where the former format is adopted (as in the case of this illustration), the entity shalldisclose additional information on the nature of expenses, including depreciation and amortisation aswell as employee benefits expense in the notes.

FRS 1.10

FRS 1.10

FRS 1.38 and 38A

FRS 1.10

FRS 1.81A

FRS 1.99

FRS 1.104

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XYZ Holdings (Singapore) Limited and its subsidiaries

Consolidated statement of comprehensive incomeFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 12

Commentary (continued):

Reporting of continuing and discontinued operations

� The separate reporting of continuing and discontinued operations in the statement ofcomprehensive income is required only where there are discontinued operations as defined by FRS105 Non-current Assets Held for Sale and Discontinued Operations.

An entity shall re-present the disclosures required for discontinued operations for prior periodspresented in the financial statements so that the disclosures relate to all operations that have beendiscontinued by the end of the reporting period for the latest period presented.

On disposal of the disposal group, the gain or loss from discontinued operation presented on thestatement of comprehensive income includes the gain or loss on disposal of the disposal groupconstituting the discontinued operation.

Other additional disclosures

� Additional line items, heading and subtotals should be presented on the face of the statement ofcomprehensive income, when such presentation is relevant to the understanding of the entity’sfinancial performance.

� Commentary on certain line items illustrated in the statement of comprehensive income

Interest income and dividend income

“Interest income” and “dividend income” exclude interest income and dividends respectively, fromfinancial assets at fair value through profit or loss. As disclosed in Note 2.15(a)(i), XYZ Holdings(Singapore) Limited has made a policy choice to include interest and dividend income in the net gainsor net losses on financial assets at fair value through profit or loss, instead of recognising themseparately.

Research and development

“Research and development” costs represent the aggregate amount of research and developmentexpenditure recognised as an expense during the period, including amortisation of deferreddevelopment cost.

Share of results of associates and joint ventures

“Share of results of associates” and “share of results of joint ventures” are presented net of tax andnon-controlling interests in the associates.

Terminology used

� Although FRS 1 uses the terms “other comprehensive income”, “profit or loss” and “totalcomprehensive income”, an entity may use other terms to describe the totals as long as the meaningis clear. For example, an entity may use the term “net income” to describe profit or loss.

FRS 105.30 and 33

FRS 105.34

FRS 105.33.b.iii

FRS 1.85

FRS 107 AGB5.e

FRS 38.126 and127

FRS 1.IG6

FRS 1.8

Page 22: XYZ Holdings (Singapore) Limited - EYFILE/ey-xyz-holdings-singapore-limited-2015.pdf · XYZ Holdings (Singapore) Limited Preface About this publication XYZ Holdings (Singapore) Limited

XYZ Holdings (Singapore) Limited and its subsidiaries

Consolidated statement of comprehensive incomeFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 13

Commentary (continued):

Tax effects related to each component of other comprehensive income

� An entity may present components of other comprehensive income either:

(a) net of related tax effects, as illustrated in the statement of comprehensive income, or

(b) before related tax effects with one amount shown for the aggregate amount of income taxrelating to those components.�

� In this illustration, the share of other comprehensive income of associates relates to propertyrevaluation attributable to owners of the associates, which is an item that will not be reclassified toprofit or loss. If an entity has share of other comprehensive income of associates which relates toitems that may be reclassified subsequently to profit or loss, the item shall be presented under thegroup of items that may be reclassified subsequently to profit or loss.

Additional illustrative disclosures:

Tax effects related to each component of other comprehensive income

� Extract of statement of comprehensive income illustrating other comprehensive income presented atgross before related tax effects:

2015$’000

2014$’000

Other comprehensive income:

Items that will not be reclassified to profit or lossNet surplus on revaluation of freehold land and buildings 1,506 2,868Share of gain on property revaluation of associates 75 12Income tax relating to components of other comprehensive

income (269) (466)1,312 2,414

Items that may be reclassified subsequently to profit orlossNet fair value gains on available-for-sale financial assets 350 135

Net fair value changes on available-for-sale financial assetsreclassified to profit or loss (120) (15)

Foreign currency translation (181) (82)

Income tax relating to components of other comprehensiveincome (56) (22)

(7) 16Other comprehensive income for the year, net of tax 1,305 2,430

Either way, the amount of income tax relating to each component of other comprehensive incomemust be disclosed either in the statement of comprehensive income or in the notes. In thisillustration, the entity has chosen to disclose the related tax effects in the Note 10 “Income taxexpense”.

FRS 1.91

FRS 1.90FRS 12.81.ab

Page 23: XYZ Holdings (Singapore) Limited - EYFILE/ey-xyz-holdings-singapore-limited-2015.pdf · XYZ Holdings (Singapore) Limited Preface About this publication XYZ Holdings (Singapore) Limited

XYZ Holdings (Singapore) Limited | 14

This page has been left blank intentionally.

Page 24: XYZ Holdings (Singapore) Limited - EYFILE/ey-xyz-holdings-singapore-limited-2015.pdf · XYZ Holdings (Singapore) Limited Preface About this publication XYZ Holdings (Singapore) Limited

XYZ Holdings (Singapore) Limited and its subsidiaries

Balance sheets ��

As at 31 December 2015

XYZ Holdings (Singapore) Limited | 15

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

Group Company2015 2014 2015 2014

Note $'000 $'000 $'000 $'000Assets

Non-current assetsProperty, plant and equipment 13 30,718 31,064 1,079 603 FRS 1.54.aInvestment properties 14 4,645 3,955 - - FRS 1.54.bIntangible assets 15 2,419 1,333 - - FRS 1.54.cLand use rights 16 5,811 5,733 - - FRS 1.55Investment in subsidiaries 17 - - 12,147 10,582 FRS 1.55Investment in joint venture 18 1,674 1,523 - - FRS 1.54.eInvestment in associates 19 10,595 10,321 - - FRS 1.54.eDeferred tax assets 20 470 463 21 26 FRS 1.54.o and 56Other receivables 21 2,793 2,778 16,753 17,401 FRS 1.54.hInvestment securities 22 4,608 3,106 - - FRS 1.54.d

63,733 60,276 30,000 28,612Current assetsGross amount due from customers for

contract work-in-progress 23 651 398 - - FRS 11.42.aDevelopment properties 24 2,900 2,650 - - FRS 1.54.gInventories 25 24,020 24,400 - - FRS 1.54.gPrepaid operating expenses 122 250 53 122 FRS 1.55Trade and other receivables 21 22,852 24,967 338 350 FRS 1.54.hInvestment securities 22 1,512 1,260 - - FRS 1.54.dDerivatives 26 170 105 - - FRS 1.54.dCash and short-term deposits 27 6,117 4,858 4,621 4,145 FRS 1.54.i

58,344 58,888 5,012 4,617Assets of disposal group classified as held for

sale 11 2,270 - 2,300 -FRS 1.54.jFRS 105.38

60,614 58,888 7,312 4,617

Total assets 124,347 119,164 37,312 33,229

Equity and liabilities

Current liabilitiesProvisions 28 801 295 - - FRS 1.54.lDeferred capital grants 29 300 210 - - FRS 20.24Income tax payable 2,927 6,734 1,447 2,115 FRS 1.54.nLoans and borrowings 30 1,189 2,290 - - FRS 1.54.mGross amount due to customers for contract

work-in-progress 23 358 586 - - FRS 11.42.bTrade and other payables 31 17,367 18,934 470 414 FRS 1.54.kOther liabilities 32 3,659 2,579 1,166 446 FRS 1.54.mDerivatives 26 22 - - - FRS 1.54.m

26,623 31,628 3,083 2,975Liabilities directly associated with disposal

group classified as held for sale 11 2,071 - - -FRS 1.54.p,FRS 105.38

28,694 31,628 3,083 2,975

Net current assets 31,920 27,260 4,229 1,642

Non-current liabilitiesProvisions 28 1,525 1,841 - - FRS 1.54.lDeferred capital grants 29 3,488 1,754 - - FRS 20.24Deferred tax liabilities 20 2,273 1,904 226 231 FRS 1.54.o and 56Loans and borrowings 30 13,415 13,188 5,750 5,628 FRS 1.54.mOther payables 31 200 - - - FRS 1.54.k

20,901 18,687 5,976 5,859

Total liabilities 49,595 50,315 9,059 8,834

Net assets 74,752 68,849 28,253 24,395

Equity attributable to owners of the CompanyShare capital 33(a) 11,090 9,665 11,090 9,665 FRS 1.54.rTreasury shares 33(b) (159) - (159) - FRS 1.54.rRetained earnings 54,657 51,627 16,700 14,309 FRS 1.54.rOther reserves 7,058 5,657 622 421 FRS 1.54.rReserve of disposal group classified as held

for sale 11 128 - - - FRS 105.3872,774 66,949 28,253 24,395

Non-controlling interests 1,978 1,900 - - FRS 1.54.qTotal equity 74,752 68,849 28,253 24,395

Total equity and liabilities 124,347 119,164 37,312 33,229

Page 25: XYZ Holdings (Singapore) Limited - EYFILE/ey-xyz-holdings-singapore-limited-2015.pdf · XYZ Holdings (Singapore) Limited Preface About this publication XYZ Holdings (Singapore) Limited

XYZ Holdings (Singapore) Limited and its subsidiaries

Balance sheets ��

As at 31 December 2015

XYZ Holdings (Singapore) Limited | 16

Commentary:

Complete set of financial statements

Ê Please refer to commentary no. 1 of the consolidated statement of comprehensive income.

� An entity shall disclose the amount expected to be recovered or settled after more than twelvemonths for each asset and liability line item that combines amounts expected to be recovered orsettled:

(a) no more than twelve months after the reporting period, and

(b) more than twelve months after the reporting period.

� An entity shall present current and non-current assets, and current and non-current liabilities, asseparate classifications in its balance sheets in accordance with FRS1.66 to FRS 1.67 except when apresentation based on liquidity provides information that is reliable and more relevant. When thatexception applies, an entity shall present all assets and liabilities in order of liquidity.

FRS 1.61

FRS 1.60

Page 26: XYZ Holdings (Singapore) Limited - EYFILE/ey-xyz-holdings-singapore-limited-2015.pdf · XYZ Holdings (Singapore) Limited Preface About this publication XYZ Holdings (Singapore) Limited

XYZ Holdings (Singapore) Limited and its subsidiaries

Statements of changes in equityFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 17

Statement of changes in equity

Attributable to owners of the Company

2015Group Note

Equity,total

Equityattributableto owners

of theCompany,

totalSharecapital

Treasuryshares

Retainedearnings

Otherreserves,

total

Fair valueadjustment

reserve

Assetrevaluation

reserve

Statutoryreserve

fund

Foreigncurrency

translationreserve

Premiumpaid on

acquisitionof non-

controllinginterests

Employeeshareoption

reserve

Gain or losson

reissuanceof treasury

shares

Equitycomponent of

convertibleredeemablepreference

shares

Reserve ofdisposalgroup

classified asheld for sale

Non-controllinginterests

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Opening balance at 1 January2015 2.2 68,849 66,949 9,665 - 51,627 5,657 426 4,414 740 (344) - 341 - 80 - 1,900

Profit for the year 4,956 4,776 – - 4,776 - - - - - - - - - - 180 FRS 1.106.d.i

Other comprehensive incomeÊ

Net gain on fair value changes ofavailable-for-sale financialassets 174 174 – – – 174 174 – – – – – – – – –

FRS 1.106A, FRS1.106.d.ii, FRS 1.82,gand FRS 107.20.a.II

Net surplus on revaluation offreehold land and buildings 1,250 1,250 – – – 1,250 – 1,250 – – – – – – – –

FRS 1.106A,FRS1.106.d.ii,FRS 1.82.g, FRS 16.77.f

Foreign currency translation (181) (171) – – – (171) – – – (171) – – – – – (10)

FRS 1.106A,FRS1.106.d.ii, FRS 1.82.g,FRS 21.52.b

Share of other comprehensiveincome of associates 62 62 – – – 62 - 62 – – – – – – – –

FRS 1.106A, FRS1.106.d.ii, FRS 1.82.h,FRS 28.39

Other comprehensive incomefor the year, net of tax 1,305 1,315 – – – 1,315 174 1,312 – (171) – – – – – (10)

Total comprehensive income forthe year 6,261 6,091 - - 4,776 1,315 174 1,312 - (171) - - - – - 170 FRS 1.106.a

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XYZ Holdings (Singapore) Limited and its subsidiaries

Statements of changes in equityFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 18

Attributable to owners of the Company

2015Group Note

Equity,total

Equityattributableto owners

of theCompany,

totalSharecapital

Treasuryshares

Retainedearnings

Otherreserves,

total

Fair valueadjustment

reserve

Assetrevaluation

reserve

Statutoryreserve

fund

Foreigncurrency

translationreserve

Premiumpaid on

acquisitionof non-

controllinginterests

Employeeshareoption

reserve

Gain or losson

reissuanceof treasury

shares

Equitycomponent of

convertibleredeemablepreference

shares

Reserve ofdisposalgroup

classified asheld for sale

Non-controllinginterests

Contributions by anddistributions to owners FRS 1.106.d.iii

Shares issued for acquisition of asubsidiary 33(a) 1,475 1,475 1,475 - - - - - - - - - - - - - FRS 1.106.d.iii

Share issuance expense 33(a) (50) (50) (50) - - - - - - - - - - - - - FRS 32.39

Grant of equity-settled shareoptions to employees 35 245 245 - - - 245 - - - - - 245 - - - - FRS 102.50

Purchase of treasury shares 33(b) (254) (254) - (254) - - - - - - - - - - - - FRS 32.33

Treasury shares reissuedpursuant to employee shareoption plans 33(b) 81 81 - 95 - (14) - - - - - (79) 65 - - -

FRS 102.50,FRS 32.33

Dividends on ordinary shares 43 (1,613) (1,613) - - (1,613) - - - - - - - - - - - FRS 1.106.d.iii

Total contributions by anddistributions to owners (116) (116) 1,425 (159) (1,613) 231 - - - - – 166 65 – - - FRS 1.106.d.iii

Changes in ownership interests insubsidiaries FRS 1.106.d.iii

Acquisition of subsidiary 17 558 - - - - - - - - - - - - - - 558

Acquisition of non-controllinginterests without a change incontrol 17 (800) (150) - - - (150) - - - - (150) - - - - (650)

Total changes in ownershipinterests in subsidiaries (242) (150) - - - (150) - - - - (150) - - - - (92) FRS 1.106.d.iii

Total transactions with ownersin their capacity as owners (358) (266) 1,425 (159) (1,613) 81 - - - - (150) 166 65 - - (92) FRS 1.106.d.iii

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XYZ Holdings (Singapore) Limited and its subsidiaries

Statements of changes in equityFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 19

Attributable to owners of the Company

2015Group Note

Equity,total

Equityattributableto owners

of theCompany,

totalSharecapital

Treasuryshares

Retainedearnings

Otherreserves,

total

Fair valueadjustment

reserve

Assetrevaluation

reserve

Statutoryreserve

fund

Foreigncurrency

translationreserve

Premiumpaid on

acquisitionof non-

controllinginterests

Employeeshareoption

reserve

Gain or losson

reissuanceof treasury

shares

Equitycomponent of

convertibleredeemablepreference

shares

Reserve ofdisposalgroup

classified asheld for sale

Non-controllinginterests

OthersReserve attributable to disposal

group classified as held forsale 11 - - - - - (128) - (128) - - - - - - 128 - FRS 105.38

Expiry of employee share options - - - - 30 (30) - - - - - (30) - - - - FRS 102.50

Transfer to statutory reservefund - - - - (163) 163 - - 163 - - - - - - - FRS 1.106.d.iii

Total Others - - - - (133) 5 - (128) 163 - - (30) - - 128 -

Closing balance at 31 December2015 74,752 72,774 11,090 (159) 54,657 7,058 600 5,598 903 (515) (150) 477 65 80 128 1,978

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

Page 29: XYZ Holdings (Singapore) Limited - EYFILE/ey-xyz-holdings-singapore-limited-2015.pdf · XYZ Holdings (Singapore) Limited Preface About this publication XYZ Holdings (Singapore) Limited

XYZ Holdings (Singapore) Limited and its subsidiaries

Statements of changes in equityFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 20

Attributable to owners of the Company

2014Group Note

Equity,total

Equityattributableto owners of

the Company,total

Sharecapital

Retainedearnings

Otherreserves,

total

Fair valueadjustment

reserve

Assetrevaluation

reserve

Statutoryreserve

fund

Foreigncurrency

translationreserve

Employeeshareoption

reserve

Equitycomponent of

convertibleredeemablepreference

shares

Non-controllinginterests

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Opening balance at 1 January 2014 2.2 62,458 61,018 9,510 48,477 3,031 328 2,000 613 (202) 292 - 1,440

Profit for the year 5,241 4,841 - 4,841 - - - - - - - 400 FRS 1.106.d.i

Other comprehensive incomeÊ

Net gain on fair value changes of available-for-sale financial assets 98 98 - - 98 98 - - - - - -

FRS 1.106A, FRS1.106.d.ii, FRS 1.82.gand FRS 107.20.a.II

Net surplus on revaluation of freehold land andbuildings 2,404 2,404 - - 2,404 - 2,404 - - - - -

FRS 1.106A, FRS1.106.d.ii,FRS 1.82.g,FRS 16.77.f

Foreign currency translation (82) (142) - - (142) - - - (142) - - 60

FRS 1.106A, FRS1.106.d.ii, FRS1.82.g, FRS 21.52.b

Share of other comprehensive income ofassociates 10 10 - - 10 - 10 - - - - -

FRS 1.106A, FRS1.106.d.ii, FRS1.82.h, FRS 28.39

Other comprehensive income for the year, net oftax 2,430 2,370 – – 2,370 98 2,414 – (142) – – 60

Total comprehensive income for the year 7,671 7,211 - 4,841 2,370 98 2,414 - (142) - - 460 FRS 1.106.a

Page 30: XYZ Holdings (Singapore) Limited - EYFILE/ey-xyz-holdings-singapore-limited-2015.pdf · XYZ Holdings (Singapore) Limited Preface About this publication XYZ Holdings (Singapore) Limited

XYZ Holdings (Singapore) Limited and its subsidiaries

Statements of changes in equityFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 21

Attributable to owners of the Company

2014Group Note

Equity,total

Equityattributableto owners of

the Company,total

Sharecapital

Retainedearnings

Otherreserves,

total

Fair valueadjustment

reserve

Assetrevaluation

reserve

Statutoryreserve

fund

Foreigncurrency

translationreserve

Employeeshareoption

reserve

Equitycomponent of

convertibleredeemablepreference

shares

Non-controllinginterests

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Contributions by and distributions to owners FRS 1.106.d.iii

Grant of equity-settled share options toemployees 35 150 150 - - 150 - - - - 150 - - FRS 102.50

Exercise of employee share options 33(a) 72 72 155 - (83) - - - - (83) - - FRS 102.50

Dividends on ordinary shares 43 (1,582) (1,582) - (1,582) - - - - - - - - FRS 1.106.d.iii

Equity component of redeemable preferenceshares 80 80 - - 80 - - - - - 80 - FRS 32.28

Total transactions with owners in their capacityas owners (1,280) (1,280) 155 (1,582) 147 - - - - 67 80 - FRS 1.106.d.iii

Others

Expiry of employee share options - - - 18 (18) - - - - (18) - - FRS 102.50

Transfer to statutory reserve fund - - - (127) 127 - - 127 - - - - FRS 1.106.d.iii

Total others - - - (109) 109 - - 127 - (18) - -

Closing balance at 31 December 2014 68,849 66,949 9,665 51,627 5,657 426 4,414 740 (344) 341 80 1,900

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

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XYZ Holdings (Singapore) Limited and its subsidiaries

Statements of changes in equityFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 22

2015Company� Note Equity, total Share capital Treasury shares Retained earnings

Other reserves,total

Employee shareoption reserve

Gain or loss onreissuance of

treasury shares

Equity componentof convertibleredeemable

preference shares

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Opening balance at 1 January 2015 24,395 9,665 - 14,309 421 341 - 80

Profit for the year, representing total comprehensive income forthe year 3,974 - - 3,974 - - - -

FRS 1.106.d.i ,FRS1.106.a

Contributions by and distributions to owners FRS 1.106.d.iii

Shares issued for acquisition of a subsidiary 33(a) 1,475 1,475 - - - - - - FRS 1.106.d.iii

Share issuance expense 33(a) (50) (50) - - - - - - FRS 32.39

Grant of equity-settled share options to employees 35 245 - - - 245 245 - - FRS 102.50

Expiry of employee share options - - - 30 (30) (30) - - FRS 102.50

Purchase of treasury shares 33(b) (254) - (254) - - - - - FRS 32.33

Treasury shares reissued pursuant to employee share option plans 81 - 95 - (14) (79) 65 - FRS 102.50, FRS 32.33

Dividends on ordinary shares 43 (1,613) - - (1,613) - - - - FRS 1.106.d.iii

Total transactions with owners in their capacity as owners (116) 1,425 (159) (1,583) 201 136 65 - FRS 1.106.d.iii

Closing balance at 31 December 2015 28,253 11,090 (159) 16,700 622 477 65 80

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

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XYZ Holdings (Singapore) Limited and its subsidiaries

Statements of changes in equityFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 23

2014Company� Note Equity, total Share capital Treasury shares Retained earnings

Other reserves,total

Employee shareoption reserve

Gain or loss onreissuance of

treasury shares

Equity componentof convertibleredeemable

preference shares

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Opening balance at 1 January 2014 23,226 9,510 - 13,424 292 292 - -

Profit for the year, representing total comprehensive income forthe year 2,449 - - 2,449 - - - -

FRS 1.106.d.i , FRS1.106.a

Contributions by and distributions to owners FRS 1.106.d.iii

Grant of equity-settled share options to employees 35 150 - - - 150 150 - - FRS 102.50

Exercise of employee share options 33(a) 72 155 - - (83) (83) - - FRS 102.50

Expiry of employee share options - - - 18 (18) (18) - - FRS 102.50

Equity component of redeemable preference shares 80 - - - 80 - - 80 FRS 32.28

Dividends on ordinary shares 43 (1,582) - - (1,582) - - - - FRS 1.106.d.iii

Total transactions with owners in their capacity as owners (1,280) 155 - (1,564) 129 49 - 80 FRS 1.106.d.iii

Closing balance at 31 December 2014 24,395 9,665 - 14,309 421 341 - 80

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

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XYZ Holdings (Singapore) Limited and its subsidiaries

Statements of changes in equityFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 24

Commentary:

Analysis of other comprehensive income for each component of equity in the statement of changes inequity

Ê FRS 1 Presentation of Financial Statements requires an analysis of other comprehensive income foreach component of equity to be presented either in the statement of changes in equity or in the notesto the financial statements.

In this illustration, the Group has chosen to present an analysis of other comprehensive income foreach component of equity in the statement of changes in equity.

Statement of changes in equity for the company

� Presentation of the statement of changes in equity for the Company when consolidated financialstatements are presented is optional. Information relating to the equity items presented in theCompany’s balance sheet may be presented in the notes to the financial statements instead.

FRS 1.106.d.iiFRS 1.106A

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XYZ Holdings (Singapore) Limited and its subsidiaries

Consolidated cash flow statement �

For the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 25

Consolidated cash flow statement2015 2014

Note $'000 $'000 FRS 7.18.b

Operating activities

Profit before tax from continuing operations 7,057 7,116

Loss before tax from discontinued operation 11 (551) (193)

Profit before tax, total 6,506 6,923

Adjustments for: FRS 7.20.b and c

Amortisation of deferred capital grant 29 (239) (180)

Amortisation of intangible assets 15 220 252

Amortisation of land use rights 16 132 130

Depreciation of property, plant and equipment 13 3,043 2,838

Grant of equity-settled share options to employees 35 245 150

Net fair value gains on investment properties 14 (489) (129)

Net fair value gains on held for trading investment securities 6 (135) (95)

Net fair value gains on derivatives 6 (43) (56)

Net fair value gains on available-for-sale financial assets (transferred fromequity on disposal of investment securities) 6 (120) (15)

Net gain on remeasuring previously held equity interest in associates to fairvalue on business combination 140 -

Fair value adjustment of contingent consideration for a businesscombination� 17 235 –

Impairment loss on property, plant and equipment 13 500 –

Impairment loss on intangible assets 15 200 –

Impairment loss on investment securities 22 198 210

Impairment loss on trade receivables 135 115

Net loss/(gain) on disposal of property, plant and equipment 76 (120)

Finance costs 1,715 1,512

Dividend income from investment securities (526) (406)

Interest income (430) (327)

Loss recognised on re-measurement to fair value less costs to sell 11 450 –

Provisions (144) 105

Share of results of joint venture (151) (128)

Share of results of associates (657) (328)

Unrealised exchange (gain)/loss (240) 120 FRS 7.28

Total adjustments 4,115 3,648

Operating cash flows before changes in working capital 10,621 10,571

Changes in working capital FRS 7.20.a

Increase in development property (250) (200)

Increase in gross amount due from customers for contract work-in-progress (253) (331)

Decrease in gross amount due to customers for contract work-in-progress (228) (356)

Decrease/(increase) in inventories 942 (1,575)

Decrease in trade and other receivables 2,245 904

Decrease in prepaid operating expenses 128 62

Decrease in trade and other payables (1,562) (1,864)

Increase/(decrease) in other liabilities 630 (496)

Total changes in working capital 1,662 (3,856)

Cash flows from operations 12,283 6,715

Interest received 430 327 FRS 7.31

Interest paid (1,834) (1,550) FRS 7.31

Income taxes paid (5,682) (3,571) FRS 7.35

Net cash flows from operating activities 5,197 1,741 FRS 7.10

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XYZ Holdings (Singapore) Limited and its subsidiaries

Consolidated cash flow statement �

For the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 26

2015 2014

Note $'000 $'000

Investing activities FRS 7.21

Net cash inflow on acquisition of a subsidiary 17 217 – FRS 7.39

Dividend income from investment securities 526 406 FRS 7.31

Proceeds from disposal of investment securities 328 278 FRS 7.16.d

Proceeds from government grants 29 2,040 1,030 FRS 20.28

Proceeds from disposal of property, plant and equipment 6,867 1,559 FRS 7.16.b

Purchase of investment securities (2,025) (588) FRS 7.16.c

Purchase of property, plant and equipment 13 (8,640) (4,358) FRS 7.16.a

Subsequent expenditure on investment properties 14 (500) – FRS 7.16.a

Additions to intangible assets 15 (200) (200) FRS 7.16.a

Net cash flows generated from/(used in) investing activities (1,387) (1,873) FRS 7.10

Financing activities FRS 7.21

Acquisition of non-controlling interests 17 (800) – FRS 7.42A

Dividends paid on ordinary shares 43 (1,613) (1,582) FRS 7.31

Purchase of treasury shares 33(b) (254) – FRS 7.17.b

Proceeds from re-issuance of treasury shares 33(b) 95 – FRS 7.17.a

Proceeds from exercise of employee share options – 72 FRS 7.17.a

Proceeds from loans and borrowings 4,259 3,000 FRS 7.17.c

Share issuance expense 17 (50) –

Repayment of loans and borrowings (2,807) – FRS 7.17.d

Repayment of obligations under finance leases (135) (132) FRS 7.17.e

Net cash flows (used in)/from financing activities (1,305) 1,358 FRS 7.10

Net increase in cash and cash equivalents 2,505 1,226

Effect of exchange rate changes on cash and cash equivalents� (50) 35 FRS 7.28

Cash and cash equivalents at 1 January 3,414 2,153 FRS 7.45

Cash and cash equivalents at 31 December 27 5,869 3,414 FRS 7.45

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

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XYZ Holdings (Singapore) Limited and its subsidiaries

Consolidated cash flow statement �

For the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 27

Additional illustrative disclosures:

Presentation of consolidated cash flow statement using direct method

Ê In this illustration, the consolidated cash flow statement is presented using indirect method wherebyprofit or loss is adjusted for the effects of non-cash transactions, deferrals, accruals and investing orfinancing cash flows. FRS 7.18 allows entities to report cash flows from operating activities usingeither the direct method or indirect method. The cash flow from operating activities prepared usingthe direct method is illustrated below:

Group

2015 2014$'000 $'000

Operating activitiesReceipts from customers XXX XXXPayments to suppliers and employees (XXX) (XXX)Cash generated from operations XXX XXXInterest paid (XXX) (XXX)Income taxes paid (XXX) (XXX)Net cash flows from/(used in) operating activities XXX (XXX)

The cash flow from financing and investing activities under the direct method are identical to thatprepared under indirect method.

Disposal of subsidiary

� In this illustration, there is no disposal of subsidiary or other business units during the financial year.If there is such disposal, an entity should disclose:

(a) The total disposal consideration;(b) The portion of the disposal consideration discharged by means of cash and cash equivalents;(c) The amount of cash and cash equivalents in the subsidiary or business unit disposed of; and(d) The amount of the assets and liabilities other than cash and cash equivalents in the subsidiary or

business unit disposed of, summarised by each major category.

An investment entity, as defined in FRS 110 Consolidated Financial Statements, need not apply (c)and (d) above to an investment in subsidiary that is required to be measured at fair value throughprofit or loss.

Illustrative note disclosure:

The company disposed of XXX Limited, a wholly owned subsidiary, on 30 November 2015 at itscarrying value. The disposal consideration was fully settled in cash.

The value of assets and liabilities of XXX Limited recorded in the consolidated financialstatements as at 30 November 2015, and the cash flow effect of the disposal were:

$’000Property, plant and equipment XXXTrade and other receivables XXXInventories XXXCash and cash equivalents XXX

XXXTrade and other payables (XXX)Income tax payable (XXX)

Carrying value of net assets XXX

Total consideration XXXCash and cash equivalents of the subsidiary (XXX)

Net cash inflow on disposal of a subsidiary XXX

FRS 7.18

FRS 7.App A

FRS 7.40.a-d

FRS 7.40A

FRS 7.40.b

FRS 7.40.d

FRS 7.40.c

FRS 7.40.a and bFRS 7.40.c

FRS 7.39

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XYZ Holdings (Singapore) Limited and its subsidiaries

Consolidated cash flow statement �

For the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 28

Commentary:

Contingent consideration for business combination

� In this illustration, there is no payment of contingent consideration for business combination duringthe year. For illustrative disclosure of contingent consideration for business combination in the yearwhen the amount is paid and its impact on the presentation in the statement of cash flows, pleaserefer to commentary no.1 of Note 32 Other liabilities.

Foreign currency translation differences

� Foreign currency translation differences that arise on translation of foreign currency cash and cashequivalents should be reported in the consolidated cash flow statement in order to reconcile openingand closing balances of cash and cash equivalents, separately from operating, financing and investingcash flows.

FRS 7.28

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 29

1. Corporate information �

XYZ Holdings (Singapore) Limited (the Company) is a limited liability companyincorporated and domiciled in Singapore and is listed on the Singapore Exchange. Theimmediate and ultimate holding company is Good Group (International) Ltd. �

The registered office and principal place of business of the Company is located at Level18, One Raffles Quay, North Tower, 048583, Singapore.

The principal activity of the Company is investment holding. The principal activities of thesubsidiaries are disclosed in Note 17 to the financial statements.

Commentary:

Disclosures required by FRS 1.138

Ê The following information may be provided in the notes to the financial statements ordisclosed elsewhere in information published with the financial statements:

- the domicile and legal form of the entity, its country of incorporation and the address ofits registered office (or principal place of business, if different from the registeredoffice);

- a description of the nature of the entity’s operations and its principal activities; and

- the name of the parent and ultimate parent of the Group.

Disclosures of name of the ultimate controlling party

� FRS 24 requires an entity to disclose the name of the entity’s parent and, if different, theultimate controlling party. The ultimate controlling party can be either an entity or a person.

Additional illustrative disclosures:

Change in entity’s name during the financial year

� If the entity changes its name during the financial year, the change shall be disclosed.

Illustrative disclosure where the entity changes its name during the financial year:

With effect from [insert effective date of change], the name of the company was changedfrom [XXX] to [XXX].

2. Summary of significant accounting policies

2.1 Basis of preparation Ê

The consolidated financial statements of the Group and the balance sheet andstatement of changes in equity of the Company have been prepared in accordance withSingapore Financial Reporting Standards (FRS).

The financial statements have been prepared on the historical cost basis except asdisclosed in the accounting policies below.

The financial statements are presented Ë in Singapore Dollars (SGD or $) and all valuesin the tables are rounded to the nearest thousand ($’000), except when otherwiseindicated.

FRS 1.138.a and cFRS 24.13CA 201.10

FRS 1.138.a

FRS 1.138.b

FRS 1.138

FRS 24.13

FRS 1.51.a

FRS 1.117

FRS 1.16, FRS1.51.b and FRS1.112.aSGX 1207.5.d

FRS 1.117.a

FRS 1.51.d and e

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 30

2. Summary of significant accounting policies (continued)

2.1 Basis of preparation Ê (continued)

Commentary:

Going concern uncertainty

Ê When preparing financial statements, management shall make an assessment of anentity’s ability to continue as a going concern. Where the effect of the judgement made inrelation to the entity’s ability to continue as a going concern has significant effect on theamounts recognised in the financial statements, the judgement made should be disclosed.

Financial statements shall be prepared on a going concern basis unless managementeither intends to liquidate the entity or to cease trading, or has no realistic alternative butto do so. When management is aware, in making its assessment, of material uncertaintiesrelated to events or conditions that may cast significant doubt upon the entity’s ability tocontinue as a going concern, those uncertainties shall be disclosed. Ê

Functional and presentation currency

� When the presentation currency is different from the functional currency of the Company,that fact shall be stated, together with disclosure of the functional currency and thereasons for using a different presentation currency.

Additional illustrative disclosures:

Going concern uncertainty

Ê Illustrative disclosure where the ability of the company to continue as a going concern isdependent on the holding company undertaking to provide continuing financial support tothe company to enable it to continue as a going concern:

The Company incurred a net loss of $XXX (2014: $XXX) during the financial yearended 31 December 2015 and as at that date, the Company’s current and totalliabilities exceeded its current and total assets by $XXX (2014: $XXX) and $XXX(2014: $XXX) respectively. These factors indicate the existence of a materialuncertainty which may cast significant doubt about the Company’s ability to continueas a going concern. The ability of the Company to continue as a going concerndepends on the holding company undertaking to provide continuing financial supportto enable the Company to continue as a going concern.

If the Company is unable to continue in operational existence for the foreseeablefuture, the Company may be unable to discharge its liabilities in the normal course ofbusiness and adjustments may have to be made to reflect the situation that assetsmay need to be realised other than in the normal course of business and at amountswhich could differ significantly from the amounts at which they are currently recordedin the balance sheet. In addition, the Company may have to reclassify non-currentassets and liabilities as current assets and liabilities. No such adjustments have beenmade to these financial statements.

FRS 1.25FRS 1.122

FRS 1.25

FRS 21.53

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 31

2. Summary of significant accounting policies (continued)

2.2 Changes in accounting policies Ê

The accounting policies adopted are consistent with those of the previous financial yearexcept in the current financial year, the Group has adopted all the new and revisedstandards which are effective for annual financial periods beginning on or after 1January 2015. The adoption of these standards did not have any effect on the financialperformance or position of the Group and the Company.

Commentary:

Ê FRSs effective for annual period beginning on or after 1 January 2015

The following FRS and INT FRS are effective for the annual period beginning on or after 1January 2015:

· Amendments to FRS 19 Defined Benefit Plans: Employee Contributions· Improvements to FRSs (January 2014)

- Amendments to FRS 102 Share Based Payments- Amendments to FRS 103 Business Combinations- Amendments to FRS 108 Operating Segments- Amendments to FRS 16 Property, Plant and Equipment and FRS 38 Intangible

Assets- Amendments to FRS 24 Related Party Disclosures

· Improvements to FRSs (February 2014)- Amendments to FRS 103 Business Combinations- Amendments to FRS 113 Fair Value Measurement- Amendments to FRS 40 Investment Property

� FRS 8 Accounting Policies, Changes in Accounting Estimates and Errors requires thedisclosure of the amount of the adjustment for the current period and each prior period(to the extent practicable) upon initial application of a Standard or an Interpretation. Inthis illustration, it is assumed that the adoption of the new and revised standards do nothave any impact on the financial statements.

2.3 Standards issued but not yet effective Ê

The Group has not adopted the following standards applicable to the Group that havebeen issued but not yet effective:

DescriptionEffective for annual periods

beginning on or after

Amendments to FRS 1 Disclosure Initiative 1 January 2016

FRS 115 Revenue from Contracts with Customers 1 January 2017

FRS 109 Financial Instruments 1 January 2018

Except for FRS 115 and FRS 109, the directors expect that the adoption of the otherstandards above will have no material impact on the financial statements in the periodof initial application. The nature of the impending changes in accounting policy onadoption of FRS 115 and FRS 109 are described below.

FRS 8.28.bFRS 8.28.dFRS 111.C2

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 32

2. Summary of significant accounting policies (continued)

2.3 Standards issued but not yet effective Ê

FRS 115 Revenue from Contracts with Customers

FRS 115 establishes a five-step model that will apply to revenue arising from contractswith customers. Under FRS 115, revenue is recognised at an amount that reflects theconsideration which an entity expects to be entitled in exchange for transferring goodsor services to a customer. The principles in FRS 115 provide a more structuredapproach to measuring and recognising revenue when the promised goods and servicesare transferred to the customer i.e. when performance obligations are satisfied.

Key issues for the Group include identifying performance obligations, accounting forcontract modifications, applying the constraint to variable consideration, evaluatingsignificant financing components, measuring progress toward satisfaction of aperformance obligation, recognising contract cost assets and addressing disclosurerequirements.

Either a full or modified retrospective application is required for annual periodsbeginning on or after1 January 2017 with early adoption permitted. The Group iscurrently assessing the impact of FRS 115 and plans to adopt the new standard on therequired effective date.

FRS 109 Financial Instruments

FRS 109 introduces new requirements for classification and measurement of financialassets, impairment of financial assets and hedge accounting. Financial assets areclassified according to their contractual cash flow characteristics and the businessmodel under which they are held. The impairment requirements in FRS 109 are basedon an expected credit loss model and replace the FRS 39 incurred loss model. Adoptingthe expected credit losses requirements will require the Group to make changes to itscurrent systems and processes.

The Group currently measures one of its investments in unquoted equity securities atcost. Under FRS 109, the Group will be required to measure the investment at fairvalue. Any difference between the previous carrying amount and the fair value wouldbe recognised in the opening retained earnings when the Group apply FRS 109.

FRS 109 is effective for annual periods beginning on or after 1 January 2018 withearly application permitted. Retrospective application is required, but comparativeinformation is not compulsory. The Group is currently assessing the impact of FRS 109and plans to adopt the standard on the required effective date.

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 33

2. Summary of significant accounting policies (continued)

2.3 Standards issued but not yet effective Ê

Commentary:

Standards issued but not yet effective

� FRS 8 requires an entity to:

(a) disclose those standards or interpretations that have been issued which are not yeteffective; and

(b) provide known or reasonably estimable information to assess the possible impact thatthe application of such FRSs will have on the entity’s financial statements in theperiod of initial application.

Therefore, the Group has listed those standards and interpretations that are issued butnot yet effective and relevant to the Group. For example, Amendments to FRS 16 and FRS41 Agriculture – Bearer Plants and FRS 114 Regulatory Deferral Accounts are not relevantand has been excluded.

The following is a list of standards and interpretations issued but not effective as at 31August 2015. Each entity should customise the note accordingly to include standards thatare applicable to the entity.

Description Effective forannual periodsbeginning on orafter

Amendments to FRS 16 and FRS 41 Agriculture - Bearer Plants 1 January 2016

Amendments to FRS 27 Equity Method in Separate FinancialStatements

1 January 2016

Amendments to FRS 16 and FRS 38 Clarification of AcceptableMethods of Depreciation and Amortisation

1 January 2016

Amendments to FRS 111 Accounting for Acquisitions of Interestsin Joint Operations

1 January 2016

Improvements to FRSs (November 2014)

(a) Amendments to FRS 105 Non-current Assets Held for Saleand Discontinued Operations

1 January 2016

(b) Amendments to FRS 107 Financial Instruments: Disclosures 1 January 2016

(c) Amendments to FRS 19 Employee Benefits 1 January 2016

Amendments to FRS 110 and FRS 28 Sale or Contribution ofAssets between an Investor and its Associate or Joint Venture

1 January 2016

Amendments to FRS 1 Disclosure Initiative 1 January 2016

Amendments to FRS 110, FRS 112 and FRS 28 InvestmentEntities: Applying the Consolidation Exception�

1 January 2016

FRS 115 Revenue from Contracts with Customers 1 January 2017

FRS 109 Financial Instruments 1 January 2018

� In August 2015, the International Accounting Standards Board (IASB) issued an exposuredraft which proposes to defer the effective date of this Amendments to FRS 110 and FRS28 to a date to be decided after the IASB completes its research project on equityaccounting. If the proposal is finalised before the financial statements for the year ending31 December 2015 are authorised for issue, the effective date should be updatedaccordingly.

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 34

2. Summary of significant accounting policies (continued)

Notes to users:

The summary of significant accounting policies in this illustration are based on assumedcircumstances of XYZ Holdings (Singapore) Limited and may not be relevant to all entities. Eachentity should customise the significant accounting policies disclosed according to the specificcircumstances relevant to the entity.

2.4 Basis of consolidation and business combinations

a) Basis of consolidation �

The consolidated financial statements comprise the financial statements of theCompany and its subsidiaries as at the end of the reporting period. Thefinancial statements of the subsidiaries used in the preparation of theconsolidated financial statements are prepared for the same reporting date asthe Company. � Consistent accounting policies are applied to like transactionsand events in similar circumstances.

All intra-group balances, income and expenses and unrealised gains and lossesresulting from intra-group transactions and dividends are eliminated in full.

Subsidiaries are consolidated from the date of acquisition, being the date onwhich the Group obtains control, and continue to be consolidated until the datethat such control ceases.

Losses within a subsidiary are attributed to the non-controlling interest even ifthat results in a deficit balance.

A change in the ownership interest of a subsidiary, without a loss of control, isaccounted for as an equity transaction. If the Group loses control over asubsidiary, it:

- de-recognises the assets (including goodwill) and liabilities of thesubsidiary at their carrying amounts at the date when control is lost;

- de-recognises the carrying amount of any non-controlling interest;

- de-recognises the cumulative translation differences recorded in equity;

- recognises the fair value of the consideration received;

- recognises the fair value of any investment retained;

- recognises any surplus or deficit in profit or loss;

- re-classifies the Group’s share of components previously recognised inother comprehensive income to profit or loss or retained earnings, asappropriate.

b) Business combinations and goodwill

Business combinations are accounted for by applying the acquisition method.�� Identifiable assets acquired and liabilities Ì assumed in a businesscombination are measured initially at their fair values at the acquisition date.Acquisition-related costs are recognised as expenses in the periods in whichthe costs are incurred and the services are received.

FRS 110.4FRS110.Appendix AFRS 110.B92

FRS 110.19 andB87

FRS 110.B86.c

FRS 110.20 andB88

FRS 110.B94

FRS 110.23FRS 110.B98

FRS 103.4FRS 103.10 and18

FRS 103.53

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 35

2. Summary of significant accounting policies (continued)

2.4 Basis of consolidation and business combinations (continued)

b) Business combinations and goodwill (continued)

Any contingent consideration to be transferred by the acquirer will berecognised at fair value at the acquisition date. Subsequent changes to the fairvalue of the contingent consideration which is deemed to be an asset orliability, will be recognised in profit or loss. Ì

The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any), that are present ownershipinterests and entitle their holders to a proportionate share of net assets in theevent of liquidation, is recognised on the acquisition date at fair value, or atthe non-controlling interest’s proportionate share of the acquiree’s identifiablenet assets. Í Other components of non-controlling interests are measured attheir acquisition date fair value, unless another measurement basis is requiredby another FRS.

Any excess of the sum of the fair value of the consideration transferred in thebusiness combination, the amount of non-controlling interest in the acquiree(if any), and the fair value of the Group’s previously held equity interest in theacquiree (if any), over the net fair value of the acquiree’s identifiable assetsand liabilities is recorded as goodwill. In instances where the latter amountexceeds the former, the excess is recognised as gain on bargain purchase inprofit or loss on the acquisition date.

Goodwill is initially measured at cost. Following initial recognition, goodwill ismeasured at cost less any accumulated impairment losses.

For the purpose of impairment testing, goodwill acquired in a businesscombination is, from the acquisition date, allocated to the Group’s cash-generating units that are expected to benefit from the synergies of thecombination, irrespective of whether other assets or liabilities of the acquireeare assigned to those units. Í

The cash-generating units to which goodwill have been allocated is tested forimpairment annually� and whenever there is an indication that the cash-generating unit may be impaired. Impairment is determined for goodwill byassessing the recoverable amount of each cash-generating unit (or group ofcash-generating units) to which the goodwill relates.

FRS 103.39, 40and 58

FRS 103.19

FRS 103.32

FRS 103.34

FRS 103.B63.a

FRS 36.80

FRS 36.90

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 36

2. Summary of significant accounting policies (continued)

2.4 Basis of consolidation and business combinations (continued)

Commentary:

Investment entities

Ê FRS 110 provides exception to the consolidation requirement for entities that meet thedefinition of an investment entity. The exception to consolidation requires investmententities to account for subsidiaries at fair value through profit or loss in accordance withFRS 39 Financial Instrument: Recognition and Measurement.

Please refer to commentary no.9 in Note 17 Investment in subsidiaries for disclosurerequirements.

Reporting date of subsidiary

� The financial statements of the parent and its subsidiaries used in the preparation of theconsolidated financial statements shall be prepared as of the same reporting date. Whenthe end of the reporting period of the parent is different from that of a subsidiary, thesubsidiary prepares, for consolidation purposes, additional financial statements as of thesame date as the financial statements of the parent, unless it is impracticable to do so.

Where it is impracticable to do so, the parent may use the financial statements of asubsidiary prepared as of a reporting date different from that of the parent, providedadjustments are made for the effects of significant transactions or events that occurbetween that date and the date of the parent’s financial statements, and the differencebetween the reporting dates of the subsidiary and parent is no more than three months. Inaddition, the length of the reporting periods and any difference in the reporting dates shallbe the same from period to period.

When the financial statements of a subsidiary used in the preparation of consolidatedfinancial statements are as of a date or for a period that is different from that of theconsolidated financial statements, an entity shall disclose the date of the end of thereporting period of the financial statements of that subsidiary and the reason for using adifferent date or period.

Contingent consideration

Ì If there is no contingent consideration recognised in a business combination, theaccounting policy is not required.

Measurement of non-controlling interest

� FRS 103 provides acquirers with the option of measuring non-controlling interest arisingin a business combination that are present ownership interests and entitle their holders toa proportionate share of net assets of the subsidiary in the event of liquidation at either:

- Fair value; or

- The non-controlling interest’s proportionate interest in the acquiree’s identifiable netassets.

The option is elected for each individual business combination and does not constitute anaccounting policy choice for similar transactions. Selecting the option will requiremanagement to carefully consider their future intentions regarding transactions with non-controlling interest, since the two options, combined with the revisions to accounting forchanges in ownership interest of a subsidiary will potentially result in significantlydifferent amounts of goodwill and equity.

Goodwill

� FRS 36 Impairment of Assets permits annual impairment test for goodwill and intangibleassets with indefinite useful lives to be performed at any time during the year provided it isat the same time each year. Different goodwill and intangible assets may be tested atdifferent times.

FRS 110.B92

FRS 110.B93

FRS 112.11

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 37

2. Summary of significant accounting policies (continued)

2.4 Basis of consolidation and business combinations (continued)

Additional illustrative disclosures:Business combinations involving entities under common control

� In this illustration, there is no business combination involving entities under commoncontrol. Where a business combination involves entities or businesses under commoncontrol, it is outside the scope of FRS 103 and may be accounted for using the pooling ofinterest method or the acquisition method (when the transaction has substance from theperspective of the reporting entity).

Illustrative accounting policy where the pooling of interest method is applied:

Business combinations involving entities under common control are accounted for byapplying the pooling of interest method which involves the following:· The assets and liabilities of the combining entities are reflected at their carrying

amounts reported in the consolidated financial statements of the controlling holdingcompany.

· No adjustments are made to reflect the fair values on the date of combination, orrecognise any new assets or liabilities.

· No additional goodwill is recognised as a result of the combination.· Any difference between the consideration paid/transferred and the equity ‘acquired’ is

reflected within the equity as merger reserve.· The statement of comprehensive income reflects the results of the combining entities

for the full year, irrespective of when the combination took place.Comparatives are restated to reflect the combination as if it had occurred from thebeginning of the earliest period presented in the financial statements or from the datethe entities had come under common control, if later.

Business combinations achieved in stages

� In this illustration, there is no business combinations achieved in stages.

Illustrative accounting policy where there is business combinations achieved in stages:

In business combinations achieved in stages, previously held equity interests in theacquiree are remeasured to fair value at the acquisition date and any corresponding gainor loss is recognised in profit or loss.

Contingent liabilities recognised in a business combination

Ì In this illustration, there is no contingent liabilities recognised in a business combination.

Illustrative accounting policy where there is contingent liabilities assumed in the businesscombination:

A contingent liability recognised in a business combination is initially measured at its fairvalue. Subsequently, it is measured at the higher of:

- The amount that would be recognised in accordance with the accounting policy forprovisions set out in Note 2.21; or

- The amount initially recognised less, when appropriate, cumulative amortisationrecognised in accordance with guidance for revenue recognition.

Goodwill

Í In this illustration, the Group does not have goodwill which forms cash generating unit inwhich part of the operation within that cash generating unit is disposed of.

Illustrative accounting policy for goodwill which forms cash generating unit in which partof the operation within that cash generating unit is disposed of:

Where goodwill forms part of a cash-generating unit and part of the operation within thatcash-generating unit is disposed of, the goodwill associated with the operation disposedof is included in the carrying amount of the operation when determining the gain or losson disposal of the operation. Goodwill disposed of in this circumstance is measured basedon the relative fair values of the operations disposed of and the portion of the cash-generating unit retained.

FRS 103.42

FRS 103.56

FRS 36.86

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 38

2. Summary of significant accounting policies (continued)

2.5 Transactions with non-controlling interests

Non-controlling interest represents the equity in subsidiaries not attributable, directlyor indirectly, to owners of the Company.

Changes in the Company’s ownership interest in a subsidiary that do not result in a lossof control are accounted for as equity transactions. In such circumstances, the carryingamounts of the controlling and non-controlling interests are adjusted to reflect thechanges in their relative interests in the subsidiary. Any difference between theamount by which the non-controlling interest is adjusted and the fair value of theconsideration paid or received is recognised directly in equity and attributed to ownersof the Company.

2.6 Foreign currency Ê

The financial statements are presented in Singapore Dollars, which is also theCompany’s functional currency. Each entity in the Group determines its own functionalcurrency and items included in the financial statements of each entity are measuredusing that functional currency.

a) Transactions and balances

Transactions in foreign currencies are measured in the respective functionalcurrencies of the Company and its subsidiaries and are recorded on initialrecognition in the functional currencies at exchange rates approximating thoseruling at the transaction dates. Monetary assets and liabilities denominated inforeign currencies are translated at the rate of exchange ruling at the end ofthe reporting period. Non-monetary items that are measured in terms ofhistorical cost in a foreign currency are translated using the exchange rates asat the dates of the initial transactions. Non-monetary items measured at fairvalue in a foreign currency are translated using the exchange rates at the datewhen the fair value was measured.

Exchange differences arising on the settlement of monetary items or ontranslating monetary items at the end of the reporting period are recognised inprofit or loss. �

b) Consolidated financial statements

For consolidation purpose, the assets and liabilities of foreign operations aretranslated into SGD at the rate of exchange ruling at the end of the reportingperiod and their profit or loss are translated at the exchange rates prevailing atthe date of the transactions. The exchange differences arising on thetranslation are recognised in other comprehensive income. On disposal of aforeign operation, the component of other comprehensive income relating tothat particular foreign operation is recognised in profit or loss.

Additional illustrative disclosures:

Partial disposal of foreign operation

Ê In this illustration, the Group does not have partial disposal of foreign operation.

Illustrative accounting policy for foreign currency for partial disposal of foreignoperation.

In the case of a partial disposal without loss of control of a subsidiary thatincludes a foreign operation, the proportionate share of the cumulativeamount of the exchange differences are re-attributed to non-controllinginterest and are not recognised in profit or loss.

FRS 110.AppendixAFRS 110.22

FRS 110.23FRS 110.B96

FRS 1.51.d

FRS 21.21

FRS 21.23

FRS 21.28

FRS 21.39

FRS 21.48

FRS 21.48C

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 39

2. Summary of significant accounting policies (continued)

2.6 Foreign currency (continued) Ê

Additional illustrative disclosures (continued):

Partial disposal of foreign operation (continued)

Ê For partial disposals of associates or jointly controlled entities that areforeign operations, the proportionate share of the accumulated exchangedifferences is reclassified to profit or loss.

Net investment in foreign operations

� In this illustration, the Group does not have exchange differences arising frommonetary items that form part of the Group’s net investment in foreignoperation.

Illustrative accounting policy for exchange differences arising from monetaryitems that form part of the Group’s net investment in foreign operation.

Exchange differences arising on monetary items that form part of theGroup’s net investment in foreign operations are recognised initially in othercomprehensive income and accumulated under foreign currency translationreserve in equity. The foreign currency translation reserve is reclassifiedfrom equity to profit or loss of the Group on disposal of the foreignoperation.

2.7 Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. Subsequent torecognition, property, plant and equipment other than freehold land and buildings aremeasured at cost less accumulated depreciation and any accumulated impairmentlosses.

Freehold land and buildings are measured at fair value less accumulated depreciationon buildings and impairment losses recognised after the date of the revaluation.Valuations are performed with sufficient regularity to ensure that the carrying amountdoes not differ materially from the fair value of the freehold land and buildings at theend of the reporting period.

Any revaluation surplus is recognised in other comprehensive income and accumulatedin equity under the asset revaluation reserve, except to the extent that it reverses arevaluation decrease of the same asset previously recognised in profit or loss, in whichcase the increase is recognised in profit or loss. A revaluation deficit is recognised inprofit or loss, except to the extent that it offsets an existing surplus on the same assetcarried in the asset revaluation reserve.

Any accumulated depreciation as at the revaluation date is eliminated against the grosscarrying amount of the asset and the net amount is restated to the revalued amount ofthe asset. Ê The revaluation surplus included in the asset revaluation reserve inrespect of an asset is transferred directly to retained earnings on retirement ordisposal of the asset. �

Freehold land has an unlimited useful life and therefore is not depreciated.

Depreciation is computed on a straight-line basis over the estimated useful lives of theassets as follows:

- Buildings: 40 years- Plant and equipment: 3 to 15 years- Furniture and fixtures: 5 to 20 years

FRS 21.32 and 48

FRS 16.15 and 16FRS 16.30

FRS 16.31 and73.a

FRS 16.39

FRS 16.40

FRS 16.35.b

FRS 16.41

FRS 16.73.b and c

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 40

2. Summary of significant accounting policies (continued)

2.7 Property, plant and equipment (continued)

Assets under construction included in plant and equipment are not depreciated asthese assets are not yet available for use.

The carrying values of property, plant and equipment are reviewed for impairmentwhen events or changes in circumstances indicate that the carrying value may not berecoverable.

The residual value, useful life and depreciation method are reviewed at each financialyear-end, and adjusted prospectively, if appropriate.

An item of property, plant and equipment is derecognised upon disposal or when nofuture economic benefits are expected from its use or disposal. Any gain or loss on de-recognition of the asset is included in profit or loss in the year the asset isderecognised.

Commentary:

Revaluation of property, plant and equipment

Ê When an item of property, plant and equipment is revalued, any accumulated depreciationat the date of the revaluation may instead be restated proportionately with the change inthe gross carrying amount of the asset so that the carrying amount of the asset afterrevaluation equals its revalued amount. This method is often used when an asset isrevalued by means of applying an index to its depreciated replacement cost.

� Alternatively, the entity may adopt a policy to make an annual transfer of the revaluationsurplus to retained earnings as the asset is used. In such a case, the amount of thesurplus transferred would be the difference between depreciation based on the revaluedcarrying amount of the asset and depreciation based on the asset’s original cost.

2.8 Investment properties ÊÌ

Investment properties are properties that are either owned by the Group or leasedunder a finance lease that are held to earn rentals or for capital appreciation, or both,rather than for use in the production or supply of goods or services, or foradministrative purposes, or in the ordinary course of business. Investment propertiescomprise completed investment properties and properties that are being constructedor developed for future use as investment properties. Properties held under operatingleases are classified as investment properties when the definition of an investmentproperty is met.

Investment properties are initially measured at cost, including transaction costs.

Subsequent to initial recognition, investment properties are measured at fair value. �Gains or losses arising from changes in the fair values of investment properties areincluded in profit or loss in the year in which they arise.

Investment properties are derecognised when either they have been disposed of orwhen the investment property is permanently withdrawn from use and no futureeconomic benefit is expected from its disposal. Any gains or losses on the retirement ordisposal of an investment property are recognised in profit or loss in the year ofretirement or disposal.

FRS 36.9

FRS 16.51FRS 16.61

FRS 16.67FRS 16.68

FRS 16.35.a

FRS 16.41

FRS 40.5

FRS 40.8.e

FRS 40.6

FRS 40.20

FRS 40.33

FRS 40.35

FRS 40.66

FRS 40.69

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 41

2. Summary of significant accounting policies (continued)

2.8 Investment properties ÊÌ (continued)

Commentary:

Investment properties

Ê Judgement is needed to determine whether a property qualifies as investment property.When classification is difficult, the entity should disclose the criteria developed by theentity so that it can exercise that judgement consistently in accordance with the definitionof investment property.

� Alternatively, the entity may adopt the cost model which is to measure investmentproperties at cost less accumulated depreciation and accumulated impairment losses. Inthese circumstances, disclosure about the cost basis and depreciation rates would berequired. This option is not available if the entity accounts for property interest held underan operating lease as investment property.

In addition, for any investment properties recorded at cost, FRS 40 requires disclosureabout the fair value, including disclosures about the methods and significant assumptionsused to determine the fair value. Therefore, companies would still need to determine thefair value of the investment properties. In the exceptional cases when an entity cannotmeasure the fair value of investment properties reliably, it shall disclose:

(a) a description of the investment properties;

(b) an explanation of why fair value cannot be measured reliably; and

(c) if possible, the range of estimate within which fair value is highly likely to lie.

� If an owner-occupied property becomes an investment property that will be carried at fairvalue, the entity shall treat any difference at that date between the carrying amount ofthe property in accordance with FRS 16 and its fair value in the same way as a revaluationin accordance with FRS 16.

FRS 40.14 and 75.c

FRS 40.30 and 56

FRS 40.34

FRS 40.79.e

FRS 40.61

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 42

2. Summary of significant accounting policies (continued)

2.9 Intangible assets

Intangible assets acquired separately are measured initially at cost. Following initialacquisition, intangible assets are carried at cost less any accumulated amortisation andany accumulated impairment losses. Ê Internally generated intangible assets,excluding capitalised development costs, are not capitalised and expenditure isreflected in profit or loss in the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite useful lives are amortised over the estimated useful livesand assessed for impairment whenever there is an indication that the intangible assetmay be impaired. The amortisation period and the amortisation method are reviewed atleast at each financial year-end. Changes in the expected useful life or the expectedpattern of consumption of future economic benefits embodied in the asset is accountedfor by changing the amortisation period or method, as appropriate, and are treated aschanges in accounting estimates.

Intangible assets with indefinite useful lives or not yet available for use are tested forimpairment annually�, or more frequently if the events and circumstances indicatethat the carrying value may be impaired either individually or at the cash-generatingunit level. Such intangible assets are not amortised. The useful life of an intangibleasset with an indefinite useful life is reviewed annually to determine whether the usefullife assessment continues to be supportable. If not, the change in useful life fromindefinite to finite is made on a prospective basis.

Gains or losses arising from de-recognition of an intangible asset are measured as thedifference between the net disposal proceeds and the carrying amount of the asset andare recognised in profit or loss when the asset is derecognised.

a) Brands

The brands were acquired in business combinations. The useful lives of thebrands are estimated to be indefinite because based on the current marketshare of the brands, management believes there is no foreseeable limit to theperiod over which the brands are expected to generate net cash inflows for theGroup.

b) Research and development costs

Research costs are expensed as incurred. Deferred development costs arisingfrom development expenditures on an individual project are recognised as anintangible asset when the Group can demonstrate the technical feasibility ofcompleting the intangible asset so that it will be available for use or sale, itsintention to complete and its ability to use or sell the asset, how the asset willgenerate future economic benefits, the availability of resources to completeand the ability to measure reliably the expenditures during the development.

FRS 38.24FRS 38.33

FRS 38.74

FRS 38.88

FRS 38.97 and118.bFRS 36.9

FRS 38.104

FRS 36.10.a

FRS 36.9

FRS 38.107FRS 38.109

FRS 38.113

FRS 38.118.aFRS 38.122.a

FRS 38.54FRS 38.57

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 43

2. Summary of significant accounting policies (continued)

2.9 Intangible assets (continued)

b) Research and development costs (continued)

Following initial recognition of the deferred development costs as an intangibleasset, it is carried at cost less accumulated amortisation and any accumulatedimpairment losses. Amortisation of the intangible asset begins whendevelopment is complete and the asset is available for use. Deferreddevelopment costs have a finite useful life and are amortised over the periodof expected sales from the related project (ranging from 4 to 8 years) on astraight line basis.

c) Club membership

Club membership was acquired separately and is amortised on a straight linebasis over its finite useful life of 10 years.

Commentary:

Intangible assets

Ê Alternatively, the entity may adopt the revaluation model which is to measure intangibleassets at fair value less accumulated amortisation and accumulated impairment losses.This option is only available if the fair value can be determined by reference to an activemarket.

� Please refer to commentary no.5 of Note 2.4 Business combinations and goodwill.

2.10 Land use rights Ê

Land use rights are initially measured at cost. Following initial recognition, land userights are measured at cost less accumulated amortisation. The land use rights areamortised on a straight-line basis over the lease term of 50 years.

Commentary:

Land use rights

Ê Long-term land-use rights are leases under the definition of FRS 17. In this illustration, itis assumed that the lease does not transfer substantially all the risks and rewardsincidental to ownership of the land. Therefore, the lease is an operating lease and thepayments made on acquiring the land-use right represent prepaid lease payments.

FRS 38.74

FRS 38.118.a and b

FRS 38.118.a and b

FRS 38.75

FRS 17.8

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 44

2. Summary of significant accounting policies (continued)

2.11 Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an assetmay be impaired. If any indication exists, or when an annual impairment testing for anasset is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fairvalue less costs of disposal and its value in use and is determined for an individualasset, unless the asset does not generate cash inflows that are largely independent ofthose from other assets or groups of assets. Where the carrying amount of an asset orcash-generating unit exceeds its recoverable amount, the asset is considered impairedand is written down to its recoverable amount.

Impairment losses of continuing operations are recognised in profit or loss, except forassets that are previously revalued where the revaluation was taken to othercomprehensive income. In this case, the impairment is also recognised in othercomprehensive income up to the amount of any previous revaluation.

A previously recognised impairment loss is reversed only if there has been a change inthe estimates used to determine the asset’s recoverable amount since the lastimpairment loss was recognised. If that is the case, the carrying amount of the asset isincreased to its recoverable amount. That increase cannot exceed the carrying amountthat would have been determined, net of depreciation, had no impairment loss beenrecognised previously. Such reversal is recognised in profit or loss unless the asset ismeasured at revalued amount, in which case the reversal is treated as a revaluationincrease.

2.12 Subsidiaries

A subsidiary is an investee that is controlled by the Group. The Group controls aninvestee when it is exposed, or has rights, to variable returns from its involvement withthe investee and has the ability to affect those returns through its power over theinvestee.

In the Company’s separate financial statements, investments in subsidiaries areaccounted for at cost less impairment losses. Ê

Commentary:

Subsidiaries

Ê Alternatively, the entity may choose to account for its investment in subsidiary inaccordance with FRS 39 Financial Instruments: Recognition and Measurement. The sameaccounting must be applied for all investments in subsidiaries. When an entity accountsfor a subsidiary at fair value in accordance with FRS 39, this treatment continues whenthe subsidiary is subsequently classified as held for sale.

FRS 36.9

FRS 36.18 and 22

FRS 36.59

FRS 36.60

FRS 36.114

FRS 36.117

FRS 36.119

FRS 110.6

FRS 27.17.c

FRS 27.10.b

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 45

2. Summary of significant accounting policies (continued)

2.13 Joint arrangements

A joint arrangement is a contractual arrangement whereby two or more parties havejoint control. Joint control is the contractually agreed sharing of control of anarrangement, which exists only when decisions about the relevant activities require theunanimous consent of the parties sharing control.

A joint arrangement is classified either as joint operation or joint venture, based on therights and obligations of the parties to the arrangement.

To the extent the joint arrangement provides the Group with rights to the assets andobligations for the liabilities relating to the arrangement, the arrangement is a jointoperation. To the extent the joint arrangement provides the Group with rights to thenet assets of the arrangement, the arrangement is a joint venture.

a) Joint operations ÊË

The Group recognises in relation to its interest in a joint operation,

(a) its assets, including its share of any assets held jointly;

(b) its liabilities, including its share of any liabilities incurred jointly;

(c) its revenue from the sale of its share of the output arising from the jointoperation;

(d) its share of the revenue from the sale of the output by the joint operation; and

(e) its expenses, including its share of any expenses incurred jointly.

The Group accounts for the assets, liabilities, revenues and expenses relating to itsinterest in a joint operation in accordance with the accounting policies applicable tothe particular assets, liabilities, revenues and expenses.

b) Joint ventures

The Group recognises its interest in a joint venture as an investment and accountsfor the investment using the equity method. The accounting policy for investmentin joint venture is set out in Note 2.14.

Additional illustrative disclosures:

Sales and contributions of assets to a joint operation

Ê In this illustration, sales and contributions of assets to a joint operation are not significant.

Illustrative accounting policy for sales and contributions of assets to a joint operation

When the Group enters into transaction involving a sale or contribution of assets witha joint operation in which it is a joint operator, the Group recognises gains or lossesresulting from such a transaction only to the extent of the interests held by the otherparties of the joint operation.

Purchases of assets from a joint operation

� In this illustration, purchases of assets from a joint operation are not significant.

Illustrative accounting policy for purchases of assets from a joint operation

When the Group enters into a transaction involving purchase of assets with a jointoperation in which it is a joint operator, the Group does not recognise its share of thegains and losses until it resells those assets to a third party. When such transactionsprovide evidence of a reduction in the net realisable value of the assets to bepurchased or of an impairment loss of those assets, the Group recognises it share ofthose losses.

FRS 111.4FRS 111.7

FRS 111.14

FRS 111.15

FRS 111.16

FRS 111.20

FRS 111.21

FRS 112.21.b.i

FRS 111.B34

FRS 111.B36

FRS 111.B37

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2. Summary of significant accounting policies (continued)

2.14 Joint ventures and associates ��

An associate is an entity over which the Group has the power to participate in thefinancial and operating policy decisions of the investee but does not have control orjoint control of those policies.

The Group account for its investments in associates and joint ventures using the equitymethod from the date on which it becomes an associate or joint venture.

On acquisition of the investment, any excess of the cost of the investment over theGroup’s share of the net fair value of the investee’s identifiable assets and liabilities isaccounted as goodwill and is included in the carrying amount of the investment. Anyexcess of the Group’s share of the net fair value of the investee’s identifiable assetsand liabilities over the cost of the investment is included as income in thedetermination of the entity’s share of the associate or joint venture’s profit or loss inthe period in which the investment is acquired.

Under the equity method, the investment in associates or joint ventures are carried inthe balance sheet at cost plus post-acquisition changes in the Group’s share of netassets of the associates or joint ventures. The profit or loss reflects the share of resultsof the operations of the associates or joint ventures. Distributions received from jointventures or associates reduce the carrying amount of the investment. Where there hasbeen a change recognised in other comprehensive income by the associates or jointventure, the Group recognises its share of such changes in other comprehensiveincome. Unrealised gains and losses resulting from transactions between the Groupand associate or joint venture are eliminated to the extent of the interest in theassociates or joint ventures.

When the Group’s share of losses in an associate or joint venture equals or exceeds itsinterest in the associate or joint venture, � the Group does not recognise furtherlosses, unless it has incurred obligations or made payments on behalf of the associateor joint venture.

After application of the equity method, the Group determines whether it is necessary torecognise an additional impairment loss on the Group’s investment in associate or jointventures. The Group determines at the end of each reporting period whether there isany objective evidence that the investment in the associate or joint venture is impaired.If this is the case, the Group calculates the amount of impairment as the differencebetween the recoverable amount of the associate or joint venture and its carrying valueand recognises the amount in profit or loss.

The financial statements of the associates and joint ventures are prepared as the samereporting date as the Company.�Where necessary, adjustments are made to bring theaccounting policies in line with those of the Group.

FRS 28.3

FRS 28.16FRS 28.32

FRS 28.32

FRS 28.10

FRS 28.28

FRS 28.38

FRS 28.40

FRS 28.42

FRS 28.33 and 44FRS 28.35

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 47

2. Summary of significant accounting policies (continued)

2.14 Joint ventures and associates �� (continued)

Commentary:

Joint ventures and associates

� The interest in an associate or a joint venture is the carrying amount of the investment inthe associate or joint venture under the equity method together with any long-terminterests that, in substance, form part of the investor’s net investment in the associate orjoint venture. For example, an item for which settlement is neither planned nor likely tooccur in the foreseeable future is, in substance, an extension of the entity’s investment inthat associate or joint venture. Such items may include preference shares and long-termreceivables or loans but do not include trade receivables, trade payables or any long-termreceivables for which adequate collateral exists, such as secured loans.

� The financial statements of the associate or joint venture are prepared as of the samereporting date as the Company unless it is impracticable to do so. When the financialstatements of an associate or joint venture used in applying the equity method areprepared as of a different reporting date from that of the Company, adjustments are madefor the effects of significant transactions or events that occur between that date and thereporting date of the Company. In any case, the difference between the end of thereporting period of the associate or joint venture and that of the investor shall be no morethan three months. The length of the reporting periods and any difference between theends of the reporting periods shall be the same from period to period.

When the financial statements of an associate or joint venture used in applying the equitymethod are as of a reporting date or for a period that is different from that of theCompany, the reporting date of the financial statements of the associate or joint ventureand the reason for using a different reporting date or different period shall be disclosed.

Additional illustrative disclosures:

Loss of significant influence or joint control

Ê In this illustration, loss of significant influence over associate or joint control over jointventure is not significant to the Group.

Illustrative accounting policy upon loss of significant influence over associate or jointcontrol over joint venture:

Upon loss of significant influence or joint control over the associate or joint venture,the Group measures the retained interest at fair value. Any difference between the fairvalue of the aggregate of the retained interest and proceeds from disposal and thecarrying amount of the investment at the date the equity method was discontinued isrecognised in profit or loss.

Changes in ownership interest

� In this illustration, changes in ownership interest without loss of significant influence orjoint control is not significant to the Group.

Illustrative accounting policy upon changes in ownership interest:

If the Group’s ownership interest in an associate or a joint venture is reduced, but theGroup continues to apply the equity method, the Group reclassifies to profit or loss theproportion of the gain or loss that had previously been recognised in othercomprehensive income relating to that reduction in ownership interest if that gain orloss would be required to be reclassified to profit or loss on the disposal of the relatedassets or liabilities.

FRS 28.38

FRS 28.33FRS 28.34

FRS 112.22.b

FRS 28.22

FRS 28.25

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Notes to the financial statementsFor the financial year ended 31 December 2015

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2. Summary of significant accounting policies (continued)

2.15 Financial instruments ÊË

a) Financial assets

Initial recognition and measurement

Financial assets are recognised when, and only when, the Group becomes aparty to the contractual provisions of the financial instrument. The Groupdetermines the classification of its financial assets at initial recognition.

When financial assets are recognised initially, they are measured at fair value,plus, in the case of financial assets not at fair value through profit or loss,directly attributable transaction costs.

Subsequent measurement ÌÍ

The subsequent measurement of financial assets depends on theirclassification as follows:

i) Loans and receivables

Non-derivative financial assets with fixed or determinable payments thatare not quoted in an active market are classified as loans andreceivables. Subsequent to initial recognition, loans and receivables aremeasured at amortised cost using the effective interest method, lessimpairment. Gains and losses are recognised in profit or loss when theloans and receivables are derecognised or impaired, and through theamortisation process.

ii) Available-for-sale financial assets

Available-for-sale financial assets include equity and debt securities.Equity investments classified as available-for-sale are those, which areneither classified as held for trading nor designated at fair value throughprofit or loss. Debt securities in this category are those which areintended to be held for an indefinite period of time and which may besold in response to needs for liquidity or in response to changes in themarket conditions.

After initial recognition, available-for-sale financial assets aresubsequently measured at fair value. Any gains or losses from changesin fair value of the financial assets are recognised in othercomprehensive income, except that impairment losses, foreignexchange gains and losses on monetary instruments and interestcalculated using the effective interest method are recognised in profit orloss. The cumulative gain or loss previously recognised in othercomprehensive income is reclassified from equity to profit or loss as areclassification adjustment when the financial asset is de-recognised.

Investments in equity instruments whose fair value cannot be reliablymeasured are measured at cost less impairment loss.

De-recognition

A financial asset is derecognised where the contractual right to receive cashflows from the asset has expired.� On de-recognition of a financial asset inits entirety, the difference between the carrying amount and the sum of theconsideration received and any cumulative gain or loss that had beenrecognised in other comprehensive income is recognised in profit or loss.

FRS 107.21

FRS 39.14

FRS 39.43

FRS 39.9

FRS 39.46.a

FRS 39.56FRS 107.AGB5.e

FRS 107.AGB5.bFRS 39.9

FRS 39.46

FRS 39.55.bFRS 107.AGB5.e

FRS 39.46.c

FRS 39.17.aFRS 39.26

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Notes to the financial statementsFor the financial year ended 31 December 2015

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2. Summary of significant accounting policies (continued)

2.15 Financial instruments (continued)

b) Financial liabilities

Initial recognition and measurement

Financial liabilities are recognised when, and only when, the Group becomes aparty to the contractual provisions of the financial instrument. The Groupdetermines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value plus in the case offinancial liabilities not at fair value through profit or loss, directly attributabletransaction costs.

Subsequent measurement

After initial recognition, financial liabilities that are not carried at fair valuethrough profit or loss are subsequently measured at amortised cost using theeffective interest method. Gains and losses are recognised in profit or losswhen the liabilities are derecognised, and through the amortisation process.

De-recognition

A financial liability is de-recognised when the obligation under the liability isdischarged or cancelled or expires. When an existing financial liability isreplaced by another from the same lender on substantially different terms, orthe terms of an existing liability are substantially modified, such an exchangeor modification is treated as a de-recognition of the original liability and therecognition of a new liability, and the difference in the respective carryingamounts is recognised in profit or loss.

Commentary :

Transfers between fair value hierarchy

Ê The policy for determining the timing of transfers between levels of the fair include thefollowing:

(a) The date of the event or change in circumstances that caused the transfer(b) the beginning of the reporting period(c) the end of the reporting period

The policy about the timing of recognising transfers shall be the same for transfers intolevels as for transfers out of the levels. Ê

FRS 39.14

FRS 39.43

FRS 39.56FRS 107.B5.e

FRS 39.39

FRS 39.40 and 41

FRS 113.95

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 50

2. Summary of significant accounting policies (continued)

2.15 Financial instruments (continued)

Commentary:

Financial assets or financial liabilities designated as at fair value through profit or loss

Ë In this illustration, no financial instrument has been designated as financial assets orfinancial liabilities at fair value through profit or loss. The following disclosures ofaccounting policies apply if there is any financial asset or financial liability designated as atfair value through profit or loss:

(a) The nature of the financial assets or financial liabilities the entity has designated asat fair value through profit or loss;

(b) The criteria for so designating such financial assets or financial liabilities on initialrecognition; and

(c) How the entity has satisfied the conditions in paragraph 9, 11A or 12 of FRS 39 forsuch designation. For instruments designated as at fair value through profit or lossin accordance with FRS 39.9.b.i, that disclosure includes a narrative description ofthe circumstances underlying the measurement or recognition inconsistency thatwould otherwise arise. For instruments designated as at fair value through profit orloss in accordance with paragraph FRS 39.9.b.ii, that disclosure includes a narrativedescription of how designation at fair value through profit or loss is consistent withthe entity’s documented risk management or investment strategy.

(d) How net gains or net losses are determined, for example, whether the net gains ornet losses on items at fair value through profit or loss include interest or dividendincome or exclude interest or dividend income.

Net gain or loss on financial assets at fair value through profit or loss

Ì Alternatively, interest and dividend income may be recognised separately.

Additional illustrative disclosures:

Transfers between fair value hierarchy

Ê In this illustration, transfers between levels of the fair value hierarchy are not common forthe Group.

Illustrative accounting policy for transfers between levels of the fair value hierarchy.

Transfers between levels of the fair value hierarchy are deemed to have occurred onthe date of the event or change in circumstances that caused the transfers.

Regular way purchases and sales

Ë In this illustration, the Group does not have regular way purchases and sales of financialassets.

Illustrative accounting policy for regular way purchase and sale of a financial asset:

All regular way purchases and sales of financial assets are recognised or derecognisedon the trade date i.e. the date that the Group commits to purchase or sell the asset.Regular way purchases or sales are purchases or sales of financial assets that requiredelivery of assets within the period generally established by regulation or conventionin the marketplace concerned.

Alternatively, regular way purchases and sales can be accounted for on settlement dates.

FRS 107.B5.a

FRS 107.B5.e

FRS 39.9FRS 39.38

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Notes to the financial statementsFor the financial year ended 31 December 2015

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2. Summary of significant accounting policies (continued)

2.15 Financial instruments (continued)

Additional illustrative disclosures (continued):

Financial assets and financial liabilities at fair value through profit or loss which are held fortrading

Ì In this illustration, financial assets and financial liabilities at fair value through profit orloss which are classified as held for trading are not significant to the Group.

Illustrative accounting policies for financial assets at fair value through profit or loss whichare classified as held for trading (if significant):

Financial assets at fair value through profit or loss include financial assets held fortrading. Ë Financial assets are classified as held for trading if they are acquired forthe purpose of selling or repurchasing in the near term. This category includesderivative financial instruments entered into by the Group. Derivatives, includingseparated embedded derivatives are also classified as held for trading.

Subsequent to initial recognition, financial assets at fair value through profit or lossare measured at fair value. Any gains or losses arising from changes in fair value of thefinancial assets are recognised in profit or loss. Net gains or net losses on financialassets at fair value through profit or loss include exchange differences, interest anddividend income. Ì

Derivatives embedded in host contracts are accounted for as separate derivatives andrecorded at fair value if their economic characteristics and risks are not closely relatedto those of the host contracts and the host contracts are not measured at fair valuewith changes in fair value recognised in profit or loss. These embedded derivatives aremeasured at fair value with changes in fair value recognised in profit or loss.Reassessment only occurs if there is a change in the terms of the contract thatsignificantly modifies the cash flows that would otherwise be required.

Illustrative accounting policies for financial liabilities at fair value through profit or losswhich are classified as held for trading (if significant):

Financial liabilities at fair value through profit or loss include financial liabilities heldfor trading. Ë Financial liabilities are classified as held for trading if they are acquiredfor the purpose of selling in the near term. This category includes derivative financialinstruments entered into by the Group that are not designated as hedging instrumentsin hedge relationships. Separated embedded derivatives are also classified as held fortrading unless they are designated as effective hedging instruments.

Subsequent to initial recognition, financial liabilities at fair value through profit or lossare measured at fair value. Any gains or losses arising from changes in fair value of thefinancial liabilities are recognised in profit or loss.

Held–to-maturity investments

Í In this illustration, held-to-maturity investments are not significant to the Group.

Illustrative accounting policies for held-to-maturity investments (if significant):

Non-derivative financial assets with fixed or determinable payments and fixed maturityare classified as held-to-maturity when the Group has the positive intention and abilityto hold the investment to maturity. Subsequent to initial recognition, held-to-maturityinvestments are measured at amortised cost using the effective interest method, lessimpairment. Gains and losses are recognised in profit or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisationprocess.

FRS 39.9

FRS 39.46FRS 39.55.aFRS 107.B5.e

FRS 39.11

INT FRS 109.7

FRS 39.9FRS 39.47.a

FRS 39.47FRS 39.55.bFRS 107.B5.e

FRS 107.B5.e

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 52

2. Summary of significant accounting policies (continued)

2.15 Financial instruments (continued)

Additional illustrative disclosures (continued):

De-recognition of financial assets

� In this illustration, there is no transfer of financial asset.

Illustrative accounting policy when the entity transfers its financial asset:

A financial asset (or, where applicable a part of a financial asset or part of a group ofsimilar financial asset) is de-recognised when:

(a) The Group transfers the contractual rights to receive the cash flows of thefinancial asset; or

(b) The Group retains the contractual rights to receive the cash flows of the financialasset, but assumes a contractual obligation to pay the cash flows to one or morerecipients in a “past-through” arrangement; or

(c) The Group has transferred its rights to receive cash flows from the asset andeither has transferred substantially all the risks and rewards of the asset, or hasneither transferred nor retained substantially all the risks and rewards of theasset, but has transferred control of the asset.

Where the Group has transferred its rights to receive cash flows from an asset and hasneither transferred nor retained substantially all the risks and rewards of the asset nortransferred control of the asset, the asset is recognised to the extent of the Group’scontinuing involvement in the asset. Continuing involvement that takes the form of aguarantee over the transferred asset, is measured at the lower of the original carryingamount of the asset and the maximum amount of consideration that the Group couldbe required to repay.

Where continuing involvement takes the form of a written and/or purchased option onthe transferred asset, the extent of the Group’s continuing involvement is the amountof the transferred asset that the group may repurchase, except that in the case of awritten put option on an asset measured at fair value, the extent of the Group’scontinuing involvement is limited to the lower of the fair value of the transferred assetand the option exercise price.

If the Group have transfers of financial assets that are not derecognised in their entiretyor transfers of financial assets that are derecognised in their entirety but retainscontinuing involvement, please refer to disclosure requirements of paragraphs 42A to42H and AGB 29 to AGB 39 of FRS 107.

FRS 39.18

FRS 39.18.b and19

FRS 39.20

FRS 39.20.c.ii

FRS 39.30.a

FRS 39.20.b and c

FRS 107.42A-42HFRS 107.AGB 29-AGB 39

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XYZ Holdings (Singapore) Limited | 53

2. Summary of significant accounting policies (continued)

2.16 Impairment of financial assets

The Group assesses at each reporting date whether there is any objective evidence thata financial asset is impaired. Ê

a) Financial assets carried at amortised costFor financial assets carried at amortised cost, the Group first assesses whetherobjective evidence of impairment exists individually for financial assets that areindividually significant, or collectively for financial assets that are notindividually significant. If the Group determines that no objective evidence ofimpairment exists for an individually assessed financial asset, whethersignificant or not, it includes the asset in a group of financial assets with similarcredit risk characteristics and collectively assesses them for impairment.Assets that are individually assessed for impairment and for which animpairment loss is, or continues to be recognised are not included in acollective assessment of impairment.

If there is objective evidence that an impairment loss on financial assetscarried at amortised cost has been incurred, the amount of the loss ismeasured as the difference between the asset’s carrying amount and thepresent value of estimated future cash flows discounted at the financial asset’soriginal effective interest rate. If a loan has a variable interest rate, thediscount rate for measuring any impairment loss is the current effectiveinterest rate. The carrying amount of the asset is reduced through the use ofan allowance account.� The impairment loss is recognised in profit or loss.

When the asset becomes uncollectible, the carrying amount of impairedfinancial asset is reduced directly or if an amount was charged to theallowance account, the amounts charged to the allowance account are writtenoff against the carrying value of the financial asset.

To determine whether there is objective evidence that an impairment loss onfinancial assets has been incurred, the Group considers factors such as theprobability of insolvency or significant financial difficulties of the debtor anddefault or significant delay in payments.

If in a subsequent period, the amount of the impairment loss decreases and thedecrease can be related objectively to an event occurring after the impairmentwas recognised, the previously recognised impairment loss is reversed to theextent that the carrying amount of the asset does not exceed its amortisedcost at the reversal date. The amount of reversal is recognised in profit or loss.

b) Financial assets carried at cost

If there is objective evidence (such as significant adverse changes in thebusiness environment where the issuer operates, probability of insolvency orsignificant financial difficulties of the issuer) that an impairment loss onfinancial assets carried at cost had been incurred, the amount of the loss ismeasured as the difference between the asset’s carrying amount and thepresent value of estimated future cash flows discounted at the current marketrate of return for a similar financial asset. Such impairment losses are notreversed in subsequent periods.

FRS 107.21

FRS 39.58

FRS 39.64

FRS 39.63

FRS 39.AG84

FRS 107.AGB5.d

FRS 107.AGB5.f

FRS 39.65

FRS 39.66FRS 107.AGB5.f

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Notes to the financial statementsFor the financial year ended 31 December 2015

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2. Summary of significant accounting policies (continued)

2.16 Impairment of financial assets (continued)

c) Available-for-sale financial assetsIn the case of equity investments classified as available-for-sale, objectiveevidence of impairment include (i) significant financial difficulty of the issuer orobligor, (ii) information about significant changes with an adverse effect thathave taken place in the technological, market, economic or legal environmentin which the issuer operates, and indicates that the cost of the investment inequity instrument may not be recovered; and (iii) a significant or prolongeddecline in the fair value of the investment below its costs. �

If an available-for-sale financial asset is impaired, an amount comprising thedifference between its acquisition cost (net of any principal repayment andamortisation) and its current fair value, less any impairment loss previouslyrecognised in profit or loss, is transferred from other comprehensive incomeand recognised in profit or loss. Reversals of impairment losses in respect ofequity instruments are not recognised in profit or loss; increase in their fairvalue after impairment are recognised directly in other comprehensive income.

In the case of debt instruments classified as available-for-sale, impairment isassessed based on the same criteria as financial assets carried at amortisedcost. However, the amount recorded for impairment is the cumulative lossmeasured as the difference between the amortised cost and the current fairvalue, less any impairment loss on that investment previously recognised inprofit or loss. Future interest income continues to be accrued based on thereduced carrying amount of the asset, using the rate of interest used todiscount the future cash flows for the purpose of measuring the impairmentloss. The interest income is recorded as part of finance income. If, in asubsequent year, the fair value of a debt instrument increases and theincreases can be objectively related to an event occurring after the impairmentloss was recognised in profit or loss, the impairment loss is reversed in profitor loss.

Commentary:

Financial assets that are the subject of renegotiated terms

Ê When the terms of financial assets that would otherwise be past due or impaired havebeen renegotiated, the entity shall disclose the accounting policy for financial assets thatare the subject of renegotiated terms.

Impairment of financial assets carried at amortised cost

� When there is an impairment loss, the carrying amount of the asset may be reduced eitherdirectly or through the use of an allowance account.

Determination of “significant” or “prolonged” decline in fair value of financial instruments

� The determination of what is “significant” or “prolonged” depends on the circumstances atthe end of the reporting period. This requires judgement and so it varies among entities.

FRS 39.59 and61FRS 107.AGB5.f

FRS 39.67 and68

FRS 39.69

FRS 39.AG93

FRS 39.70

FRS 107.AGB5.g

FRS 39.63

FRS 39.59 and61

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2. Summary of significant accounting policies (continued)

2.17 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits, andshort-term, highly liquid investments that are readily convertible to known amount ofcash and which are subject to an insignificant risk of changes in value. These alsoinclude bank overdrafts that form an integral part of the Group’s cash management.

2.18 Construction contracts

The Group principally operates fixed price contracts. Contract revenue and contractcosts are recognised as revenue and expenses respectively by reference to the stage ofcompletion of the contract activity at the end of the reporting period (the percentageof completion method), when the outcome of a construction contract can be estimatedreliably.

When the outcome of a construction contract cannot be estimated reliably (principallyduring early stages of a contract), contract revenue is recognised only to the extent ofcontract costs incurred that are likely to be recoverable and contract costs arerecognised as expense in the period in which they are incurred.

An expected loss on the construction contract is recognised as an expense immediatelywhen it is probable that total contract costs will exceed total contract revenue.

In applying the percentage of completion method, revenue recognised corresponds tothe total contract revenue (as defined below) multiplied by the actual completion ratebased on the proportion of total contract costs (as defined below) incurred to date andthe estimated costs to complete. Ê

Commentary:

Stage of completion

Ê The stage of completion of a contract may be determined in a variety of ways. The entityuses the method that measures reliably the work performed. Depending on the nature ofthe contract, other acceptable methods include surveys of work performed andcompletion of a physical proportion of the contract work.

2.19 Development properties Ê

Development properties are properties acquired or being constructed for sale in theordinary course of business, rather than to be held for the Group’s own use, rental orcapital appreciation.

Development properties are held as inventories and are measured at the lower of costand net realisable value.

Non-refundable commissions paid to sales or marketing agents on the sale of realestate units are expensed when incurred.�

Net realisable value of development properties is the estimated selling price in theordinary course of business, based on market prices at the reporting date anddiscounted for the time value of money if material, less the estimated costs ofcompletion and the estimated costs necessary to make the sale.

The costs of development properties recognised in profit or loss on disposal aredetermined with reference to the specific costs incurred on the property sold and anallocation of any non-specific costs based on the relative size of the property sold.

FRS 7.46

FRS 7.6

FRS 7.8

FRS 11.22FRS 11.25

FRS 11.32

FRS 11.36FRS 11.22FRS 11.32

FRS 11.30.a

FRS 11.9

FRS 2.6.a and b

FRS 2.9

FRS 2.6 and 36.a

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2. Summary of significant accounting policies (continued)

2.19 Development properties Ê (continued)

Commentary:

Sale of completed development property and pre-completion contracts for sale of developmentproperty

Ê In this illustration, the Group does not have any sale of completed development propertyand pre-completion contracts for sale of development property.

For illustration of accounting policies relating to sale of completed development propertyand pre-completion contracts for sale of development property, please refer to AppendixA-3 Agreements for the construction of real estate.

Additional illustrative disclosures:

� Alternatively, the Group can capitalise commission paid on real estate as an asset andamortise it as the entity expects to recognise the related revenue.

Illustrative accounting policy for capitalisation of commission paid on real estate contracts.

Non-refundable commissions paid to sales or marketing agents on the sale of realestate units are capitalised and amortised to profit or loss as the Group expects torecognise the related revenue.

2.20 Inventories

Inventories are stated at the lower of cost and net realisable value. Costs incurred inbringing the inventories to their present location and condition are accounted for asfollows:

- Raw materials: purchase costs on a first-in first-out basis. Ê

- Finished goods and work-in-progress: costs of direct materials and labour and aproportion of manufacturing overheads based on normal operating capacity. Thesecosts are assigned on a first-in first-out basis.

Where necessary, allowance is provided for damaged, obsolete and slow moving itemsto adjust the carrying value of inventories to the lower of cost and net realisable value.

Net realisable value is the estimated selling price in the ordinary course of business,less estimated costs of completion and the estimated costs necessary to make the sale.

Commentary:

Cost formulas

Ê Alternatively, the costs may be assigned by using the weighted average cost formula. Anentity shall use the same cost formula for all inventories having a similar nature and use tothe entity. For inventories with a different nature or use, different cost formulas may bejustified.

FRS 2.9, 10 and36.a

FRS 2.25

FRS 2.12 and 13

FRS 2.6 and 36.a

FRS 2.25

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2. Summary of significant accounting policies (continued)

2.21 Provisions Ê

General

Provisions are recognised when the Group has a present obligation (legal orconstructive) as a result of a past event, it is probable that an outflow of resourcesembodying economic benefits will be required to settle the obligation and the amountof the obligation can be estimated reliably.

Provisions are reviewed at the end of each reporting period and adjusted to reflect thecurrent best estimate. If it is no longer probable that an outflow of economic resourceswill be required to settle the obligation, the provision is reversed. If the effect of thetime value of money is material, provisions are discounted using a current pre-tax ratethat reflects, where appropriate, the risks specific to the liability. When discounting isused, the increase in the provision due to the passage of time is recognised as a financecost.

Warranty provisions

Provisions for warranty-related costs are recognised when the product is sold orservice provided. Initial recognition is based on historical experience. The initialestimate of warranty-related costs is revised annually.

Additional illustrative disclosures:

Ê In this illustration, the Group does not have any decommissioning liability or restructuringprovision.

Provision for de-commissioning costs

Illustrative accounting policy for de-commissioning liability when the related asset ismeasured using the cost model:

The provision for de-commissioning costs arose on construction of a manufacturingfacility for the production of fire retardant materials. De-commissioning costs areprovided at the present value of expected costs to settle the obligation usingestimated cash flows and are recognised as part of the cost of that particular asset.The cash flows are discounted at a current pre-tax rate that reflects the risks specificto the de-commissioning liability. The unwinding of the discount is expensed asincurred and recognised in profit or loss as a finance cost. The estimated future costsof decommissioning are reviewed annually and adjusted as appropriate. Changes inthe estimated future costs or in the discount rate applied are added to or deductedfrom the cost of the asset.

Restructuring provision

Illustrative accounting policy for restructuring provisions:

Restructuring provisions are only recognised when general recognition criteria forprovisions are fulfilled. Additionally, the Group needs to follow a detailed formalplan about the business or part of the business concerned, the location and numberof employees affected, a detailed estimate of the associated costs and appropriatetime-line. The people affected have a valid expectation that the restructuring isbeing carried out or the implementation has been initiated already.

FRS 37.14

FRS 37.59

FRS 37.45-47

FRS 37.60

FRS 16.16.c

FRS 37.45

FRS 37.47INT FRS 101.8

FRS 37.59INT FRS 101.5

FRS 37.71FRS 37.72

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2. Summary of significant accounting policies (continued)

2.22 Government grants

Government grants are recognised when there is reasonable assurance that the grantwill be received and all attaching conditions will be complied with. Where the grantrelates to an asset, the fair value is recognised as deferred capital grant on the balancesheet and is amortised to profit or loss over the expected useful life of the relevantasset by equal annual instalments. ÊË

Where loans or similar assistance are provided by governments or related institutionswith an interest rate below the current applicable market rate, the effect of thisfavourable interest is regarded as additional government grant.

Commentary:

Government grants related to an asset

Ê Alternatively, government grants related to an asset may be presented in the balancesheet by deducting the grant in arriving at the carrying amount of the asset.

In this illustration, it is assumed that the Group did not receive non-monetary governmentgrants. If an entity receives non-monetary government grant, the asset and the grant maybe accounted for either at fair value or at nominal amount.

Government grants related to income

� Government grant shall be recognised in profit or loss on a systematic basis over theperiods in which the entity recognises as expenses the related costs for which the grantsare intended to compensate. Grants related to income may be presented as a credit inprofit or loss, either separately or under a general heading such as “Other income”.Alternatively, they are deducted in reporting the related expenses.

2.23 Financial guarantee

A financial guarantee contract is a contract that requires the issuer to make specifiedpayments to reimburse the holder for a loss it incurs because a specified debtor fails tomake payment when due in accordance with the terms of a debt instrument.

Financial guarantees are recognised initially as a liability at fair value, adjusted fortransaction costs that are directly attributable to the issuance of the guarantee.Subsequent to initial recognition, financial guarantees are recognised as income inprofit or loss over the period of the guarantee. If it is probable that the liability will behigher than the amount initially recognised less amortisation, the liability is recorded atthe higher amount with the difference charged to profit or loss.

FRS 20.39.aFRS 20.7

FRS 20.23 and 24

FRS 20.10A

FRS 20.24

FRS 20.23

FRS 20.12

FRS 20.29

FRS 107.21

FRS 39.9

FRS 39.43

FRS 39.47.c

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2. Summary of significant accounting policies (continued)

2.24 Borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they aredirectly attributable to the acquisition, construction or production of that asset.Capitalisation of borrowing costs commences when the activities to prepare the assetfor its intended use or sale are in progress and the expenditures and borrowing costsare incurred. Borrowing costs are capitalised until the assets are substantiallycompleted for their intended use or sale. All other borrowing costs are expensed in theperiod they occur. Borrowing costs consist of interest and other costs that an entityincurs in connection with the borrowing of funds.

2.25 Convertible redeemable preference shares Ê

Convertible redeemable preference shares are separated into liability and equitycomponents based on the terms of the contract.

On issuance of the convertible redeemable preference shares, the fair value of theliability component is determined using a market rate for an equivalent non-convertiblebond. This amount is classified as a financial liability measured at amortised cost (netof transaction costs) until it is extinguished on conversion or redemption in accordancewith the accounting policy set out in Note 2.15(b).

The remainder of the proceeds is allocated to the conversion option that is recognisedand included in shareholders’ equity. Transaction costs are deducted from equity, netof associated income tax. The carrying amount of the conversion option is notremeasured in subsequent years.

Transaction costs are apportioned between the liability and equity components of theconvertible redeemable preference shares based on the allocation of proceeds to theliability and equity components when the instruments are initially recognised.

Additional illustrative disclosures:

Convertible instruments with embedded derivative

Ê In this illustration, the convertible preference shares are classified as compound financialinstruments with liability and equity components based on the terms of the contract.

Illustrative accounting policy if the convertible instruments are classified as hybridinstruments with embedded derivative:

Convertible loan with conversion option are accounted for as financial liability with anembedded equity conversion derivative based on the terms of the contract.

On issuance of convertible loans, the embedded option is recognised at its fair value asderivative liability with subsequent changes in fair value recognised in profit or loss.

The remainder of the proceeds is allocated to the liability component that is carried atamortised cost until the liability is extinguished on conversion or redemption.

When an equity conversion option is exercised, the carrying amounts of the liabilitycomponent and the equity conversion option are derecognised with a correspondingrecognition of share capital.

FRS 23.8

FRS 23.17

FRS 23.22

FRS 23.8

FRS 23.5

FRS 107.21

FRS 32.28

FRS 32.32

FRS 32.31

FRS 32.38

FRS 39.AG28

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Notes to the financial statementsFor the financial year ended 31 December 2015

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2. Summary of significant accounting policies (continued)

2.26 Employee benefits ÊÊË

a) Defined contribution plans

The Group participates in the national pension schemes as defined by the lawsof the countries in which it has operations. In particular, the Singaporecompanies in the Group make contributions to the Central Provident Fundscheme in Singapore, a defined contribution pension scheme. Contributions todefined contribution pension schemes are recognised as an expense in theperiod in which the related service is performed.

b) Employee share option plans ���

Employees of the Group receive remuneration in the form of share options asconsideration for services rendered. The cost of these equity-settled sharebased payment transactions with employees is measured by reference to thefair value of the options at the date on which the options are granted whichtakes into account market conditions and non-vesting conditions. Ì This cost isrecognised in profit or loss, with a corresponding increase in the employeeshare option reserve, over the vesting period. The cumulative expenserecognised at each reporting date until the vesting date reflects the extent towhich the vesting period has expired and the Group’s best estimate of thenumber of options that will ultimately vest. The charge or credit to profit orloss for a period represents the movement in cumulative expense recognisedas at the beginning and end of that period and is recognised in employeebenefits expense.

The employee share option reserve is transferred to retained earnings uponexpiry of the share option. �

Commentary:

Defined benefit plan

Ê In this illustration, the Group does not have any defined benefit plans. For illustration ofchange in accounting policies relating to Revised FRS 19 Employee Benefits for definedbenefit plan, please refer to Appendix A-4 Defined benefit plans.

Measurement of unidentifiable goods or services

Ë In situations where equity instruments are issued and some or all of the goods or servicesreceived by the entity as consideration cannot be specifically identified, the unidentifiedgoods or services received (or to be received) are measured as the difference between thefair value of the share-based payment transaction and the fair value of any identifiablegoods or services received at the grant date. This is then capitalised or expensed asappropriate.

FRS 19.51

FRS 102.16

FRS 102.21A

FRS 102.10

FRS 102.19-21

FRS 102.13A

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2. Summary of significant accounting policies (continued)

2.26 Employee benefits ÊÊË (continued)

Commentary (continued):

Vesting and non-vesting conditions

Ì Vesting condition are conditions that determine whether the entity receives the servicesthat entitle the counterparty to receive cash, other assets or equity instruments of theentity under a share-based payment arrangement.

Vesting conditions are limited to two types:

- Service condition – a vesting condition that requires the counterparty to complete aspecified period of service which services are provided to the entity; and

- Performance condition – a vesting condition that requires

(a) the counterparty to complete a specified period of service (i.e. a servicecondition); the service requirement can be explicit or implicit and

(b) specified performance target(s) to be met while the counterparty is rendering therequired.

Any condition that is neither a service condition nor a performance condition would beregarded as a non-vesting condition. Examples of non-vesting conditions are:

- A requirement to make monthly savings during the vesting period

- A requirement for a commodity index to reach a minimum level

- Restrictions on the transfer of vested equity instruments

- An agreement not to work for a competitor after the award has vested

Non-vesting conditions are to be taken into account when estimating the fair value of theequity instruments granted.

Transfer of share option reserve

� The transfer of the employee share option reserve to retained earnings upon expiry of theoption is not mandatory. Alternatively, the employee share option reserve may be kept asa separate reserve upon expiry of the option.

Additional illustrative disclosures:

Employee leave entitlement

Ê In this illustration, it is assumed that employee leave entitlement is not significant and isnot included in the list of significant accounting policies.

Illustrative accounting policy for employee leave entitlement (if significant):

Employee entitlements to annual leave are recognised as a liability when they areaccrued to the employees. The undiscounted liability for leave expected to be settledwholly before twelve months after the end of the reporting period is recognised forservices rendered by employees up to the end of the reporting period. The liability forleave expected to be settled beyond twelve months from the end of the reporting periodis determined using the projected unit credit method. The net total of service costs, netinterest on the liability and remeasurement of the liability are recognised in profit or loss.

FRS 102.App A

FRS 102.App A

FRS 102.IG24 andBC171B

FRS 102.21

FRS 19.13

FRS 19.155FRS 19.156

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2. Summary of significant accounting policies (continued)

2.26 Employee benefits ÊÊË (continued)

Additional illustrative disclosures (continued):

Termination benefit

Ë In this illustration, the Group does not provide any termination benefit to its employees.

Illustrative accounting policy for termination benefit:

Termination benefits are employee benefits provided in exchange for the termination ofan employee’s employment as a result of either an entity’s decision to terminate anemployee’s employment before the normal retirement date or an employee’s decision toaccept an offer of benefits in exchange for the termination of employment.

A liability and expense for a termination benefits is recognised at the earlier of when theentity can no longer withdraw the offer of those benefits and when the entity recognisesrelated restructuring costs. Initial recognition and subsequent changes to terminationbenefits are measured in accordance with the nature of the employment benefits, short-term employee benefits, or other long-term employee benefits.

Modification or cancellation of employee share option plan

� In this illustration, there is no modification or cancellation of employee share option plan.

Illustrative accounting policy for modification or cancellation of employee share optionplan:

Where the terms of an equity-settled transaction award are modified, the minimumexpense recognised is the expense as if the terms had not been modified, if the originalterms of the award are met. An additional expense is recognised for any modificationthat increases the total fair value of the share-based payment transaction, or isotherwise beneficial to the employee as measured at the date of modification.

Where the employee share option plan is cancelled, it is treated as if it vested on the dateof cancellation, and any expense that otherwise would have been recognised for servicesreceived over the remaining vesting period is recognised immediately. This includes anyaward where non-vesting conditions within the control of either the entity or theemployee are not met. However, if a new award is substituted for the cancelled award,and designated as a replacement award on the date that it is granted, the cancelled andnew awards are treated as if they were a modification of the original award, as describedin the previous paragraph. All cancellations of equity-settled transaction awards aretreated equally.

Cash-settled share-based payment transactions

� In this illustration, the employee share option plans are equity-settled share-basedpayment transactions. Cash-settled share-based payment transactions are not illustrated.

Illustrative accounting policy for cash-settled share-based payment transactions:

The cost of a cash-settled share-based payment transaction is measured initially at fairvalue at the grant date. This fair value is recognised in profit or loss over the vestingperiod with recognition of a corresponding liability. Until the liability is settled, it isremeasured at each reporting date with changes in fair value recognised in profit or loss.

FRS 19.8

FRS 19.165FRS 19.169

FRS 102.28, B42-B44

FRS 102.28

FRS 102.30FRS 102.32FRS 102.33

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2. Summary of significant accounting policies (continued)

2.27 Leases

a) As lessee

Finance leases which transfer to the Group substantially all the risks andrewards incidental to ownership of the leased item, are capitalised at theinception of the lease at the fair value of the leased asset or, if lower, at thepresent value of the minimum lease payments. Any initial direct costs are alsoadded to the amount capitalised. Lease payments are apportioned between thefinance charges and reduction of the lease liability so as to achieve a constantrate of interest on the remaining balance of the liability. Finance charges arecharged to profit or loss. Contingent rents, if any, are charged as expenses inthe periods in which they are incurred.

Capitalised leased assets are depreciated over the shorter of the estimateduseful life of the asset and the lease term, if there is no reasonable certaintythat the Group will obtain ownership by the end of the lease term.

Operating lease payments are recognised as an expense in profit or loss on astraight-line basis over the lease term. The aggregate benefit of incentivesprovided by the lessor is recognised as a reduction of rental expense over thelease term on a straight-line basis.

b) As lessor

Leases in which the Group does not transfer substantially all the risks andrewards of ownership of the asset are classified as operating leases. Initialdirect costs incurred in negotiating an operating lease are added to thecarrying amount of the leased asset and recognised over the lease term on thesame bases as rental income. The accounting policy for rental income is setout in Note 2.29(c). Contingent rents are recognised as revenue in the periodin which they are earned.

2.28 Non-current assets held for sale and discontinued operations

Non-current assets and disposal groups classified as held for sale are measured at thelower of their carrying amount and fair value less costs to sell. Non-current assets anddisposal groups are classified as held for sale if their carrying amounts will berecovered principally through a sale transaction rather than through continuing use. Acomponent of the Group is classified as a ‘discontinued operation’ when the criteria tobe classified as held for sale have been met or it has been disposed of and such acomponent represents a separate major line of business or geographical area ofoperations or is part of a single coordinated plan to dispose of a separate major line ofbusiness or geographical area of operations.

Property, plant and equipment and intangible assets once classified as held for sale arenot depreciated or amortised.

FRS 17.8

FRS 17.20

FRS 17.25

FRS 17.27

FRS 17.33INT FRS 15.5

FRS 17.8FRS 17.52

FRS 105.15

FRS 105.6

FRS 105.32

FRS 105.25

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2. Summary of significant accounting policies (continued)

2.29 Revenue Ê

Revenue is recognised to the extent that it is probable that the economic benefits willflow to the Group and the revenue can be reliably measured, regardless of when thepayment is made. Revenue is measured at the fair value of consideration received orreceivable, taking into account contractually defined terms of payment and excludingtaxes or duty.

a) Sale of goods

Revenue from sale of goods is recognised upon the transfer of significant riskand rewards of ownership of the goods to the customer, usually on delivery ofgoods. Revenue is not recognised to the extent where there are significantuncertainties regarding recovery of the consideration due, associated costs orthe possible return of goods.

b) Rendering of services

Revenue from the installation of fire prevention equipment is recognised byreference to the stage of completion at the end of the reporting period. Stageof completion is determined by reference to labour hours incurred to date as apercentage of total estimated labour hours for each contract. Where thecontract outcome cannot be measured reliably, revenue is recognised to theextent of the expenses recognised that are recoverable.

c) Rental income

Rental income arising from operating leases on investment properties isaccounted for on a straight-line basis over the lease terms. The aggregatecosts of incentives provided to lessees are recognised as a reduction of rentalincome over the lease term on a straight-line basis.

Additional illustrative disclosures:

Revenue

Ê In this illustration, revenue from interest income and dividend income is not significant tothe Group.

Illustrative accounting policy for interest income and dividend income (if significant):

Interest incomeInterest income is recognised using the effective interest method.

Dividend incomeDividend income is recognised when the Group’s right to receive payment isestablished.

FRS 18.14, 20 and 29FRS 18.35.aFRS 18.9

FRS 18.14

FRS 18.20

FRS 18.26

FRS 17.50INT FRS 15.5

FRS 18.30.a

FRS 18.30.c

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2. Summary of significant accounting policies (continued)

2.30 Taxes

a) Current income tax

Current income tax assets and liabilities for the current and prior periods aremeasured at the amount expected to be recovered from or paid to the taxationauthorities. The tax rates and tax laws used to compute the amount are thosethat are enacted or substantively enacted at the end of the reporting period, inthe countries where the Group operates and generates taxable income.

Current income taxes are recognised in profit or loss except to the extent thatthe tax relates to items recognised outside profit or loss, either in othercomprehensive income or directly in equity. Management periodicallyevaluates positions taken in the tax returns with respect to situations in whichapplicable tax regulations are subject to interpretation and establishesprovisions where appropriate.

b) Deferred tax

Deferred tax is provided using the liability method on temporary differences atthe end of the reporting period between the tax bases of assets and liabilitiesand their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all temporary differences, except:

- Where the deferred tax liability arises from the initial recognition ofgoodwill or of an asset or liability in a transaction that is not a businesscombination and, at the time of the transaction, affects neither theaccounting profit nor taxable profit or loss; and

- In respect of taxable temporary differences associated with investments insubsidiaries, associates and interests in joint ventures, where the timing ofthe reversal of the temporary differences can be controlled and it isprobable that the temporary differences will not reverse in the foreseeablefuture.

Deferred tax assets are recognised for all deductible temporary differences,the carry forward of unused tax credits and unused tax losses, to the extentthat it is probable that taxable profit will be available against which thedeductible temporary differences, and the carry forward of unused tax creditsand unused tax losses can be utilised except:

- Where the deferred tax asset relating to the deductible temporarydifference arises from the initial recognition of an asset or liability in atransaction that is not a business combination and, at the time of thetransaction, affects neither the accounting profit nor taxable profit or loss;and

- In respect of deductible temporary differences associated withinvestments in subsidiaries, associates and interests in joint ventures,deferred tax assets are recognised only to the extent that it is probablethat the temporary differences will reverse in the foreseeable future andtaxable profit will be available against which the temporary differences canbe utilised.

FRS 12.46

FRS 12.58 and 61A

FRS 12.22.c

FRS 12.39

FRS 12.34

FRS 12.24

FRS 12.44

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2. Summary of significant accounting policies (continued)

2.30 Taxes (continued)

b) Deferred tax (continued)

The carrying amount of deferred tax assets is reviewed at the end of eachreporting period and reduced to the extent that it is no longer probable thatsufficient taxable profit will be available to allow all or part of the deferred taxasset to be utilised. Unrecognised deferred tax assets are reassessed at theend of each reporting period and are recognised to the extent that it hasbecome probable that future taxable profit will allow the deferred tax asset tobe recovered.

Deferred tax assets and liabilities are measured at the tax rates that areexpected to apply in the year when the asset is realised or the liability issettled, based on tax rates (and tax laws) that have been enacted orsubstantively enacted at the end of each reporting period.

Deferred tax relating to items recognised outside profit or loss is recognisedoutside profit or loss. Deferred tax items are recognised in correlation to theunderlying transaction either in other comprehensive income or directly inequity and deferred tax arising from a business combination is adjusted againstgoodwill on acquisition.

c) Sales tax

Revenues, expenses and assets are recognised net of the amount of sales taxexcept:

- Where the sales tax incurred on a purchase of assets or services is notrecoverable from the taxation authority, in which case the sales tax isrecognised as part of the cost of acquisition of the asset or as part of theexpense item as applicable; and

- Receivables and payables that are stated with the amount of sales taxincluded.

FRS 12.56

FRS 12.37

FRS 12.47

FRS 12.58, 61A and66

FRS 18.8

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2. Summary of significant accounting policies (continued)

2.31 Share capital and share issuance expenses

Proceeds from issuance of ordinary shares are recognised as share capital in equity.Incremental costs directly attributable to the issuance of ordinary shares are deductedagainst share capital.

2.32 Treasury shares

The Group’s own equity instruments, which are reacquired (treasury shares) arerecognised at cost and deducted from equity. No gain or loss is recognised in profit orloss on the purchase, sale, issue or cancellation of the Group’s own equity instruments.Any difference between the carrying amount of treasury shares and the considerationreceived, if reissued, is recognised directly in equity. Voting rights related to treasuryshares are nullified for the Group and no dividends are allocated to them respectively.

2.33 Contingencies

A contingent liability is:

a) a possible obligation that arises from past events and whose existence will beconfirmed only by the occurrence or non-occurrence of one or more uncertainfuture events not wholly within the control of the Group; or

b) a present obligation that arises from past events but is not recognised because:

(i) It is not probable that an outflow of resources embodying economicbenefits will be required to settle the obligation; or

(ii) The amount of the obligation cannot be measured with sufficientreliability.

A contingent asset is a possible asset that arises from past events and whose existencewill be confirmed only by the occurrence or non-occurrence of one or more uncertainfuture events not wholly within the control of the Group.

Contingent liabilities and assets are not recognised on the balance sheet of the Group,except for contingent liabilities assumed in a business combination that are presentobligations and which the fair values can be reliably determined.

FRS 32.37

FRS 32.33

FRS 37.10

FRS 37.27 and 31FRS 103.23

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3. Significant accounting judgements and estimates Ê

The preparation of the Group’s consolidated financial statements requires management tomake judgements, estimates and assumptions that affect the reported amounts ofrevenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at theend of each reporting period. Uncertainty about these assumptions and estimates couldresult in outcomes that require a material adjustment to the carrying amount of the assetor liability affected in the future periods.

Additional illustrative disclosures:

Alternative simplified disclosures

Ê Following are illustrative disclosure when management concluded that there are no significantjudgements made in applying accounting policies and no estimation uncertainty that have asignificant risk of causing a material adjustment to the carrying amounts of assets andliabilities within the next financial period.

The preparation of the Group’s consolidated financial statements requires management tomake judgements, estimates and assumptions that affect the reported amounts of therevenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at theend of reporting period. Uncertainty about these assumptions and estimates could resultin outcomes that could require a material adjustment to the carrying amount of the assetor liability affected in the future periods. Management is of the opinion that there is nosignificant judgement made in applying accounting policies and no estimation uncertaintythat have a significant risk of causing a material adjustment to the carrying amounts ofassets and liabilities within the next financial period.

3.1 Judgements made in applying accounting policies Ê

In the process of applying the Group’s accounting policies, management has made thefollowing judgements which have the most significant effect on the amounts recognisedin the consolidated financial statements:

a) Impairment of available-for-sale equity investmentsThe Group records impairment charges on available-for-sale equityinvestments when there has been a significant or prolonged decline in thefair value below their cost. The determination of what is “significant” or“prolonged” requires judgement. In making this judgement, the Groupevaluates, among other factors, historical share price movements and theduration and extent to which the fair value of an investment is less than itscost.

FRS 1.122

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3. Significant accounting judgements and estimates (continued)

3.1 Judgements made in applying accounting policies (continued)

Additional illustrative disclosures:

Judgements made in applying accounting policies

Ê In this illustration, it is assumed that these are the judgements made in applyingaccounting policies that has the most significant effect on the amounts recognised in thefinancial statements.

Illustrative disclosures of other judgements made in applying accounting policies:

Determination of lease classification

The Group has entered into commercial property leases on its investment properties.The Group evaluated the terms and conditions of the arrangements and assessed thatthe lease term does not constitute a substantial portion of the economic life of thecommercial property and the minimum lease payment is not substantially all of the fairvalue of the leased asset. The Group determined that it retains all the significant risksand rewards of ownership of these properties and so accounts for the contracts asoperating leases.

Determination of functional currency

The Group measures foreign currency transactions in the respective functionalcurrencies of the Company and its subsidiaries. In determining the functionalcurrencies of the entities in the Group, judgement is required to determine thecurrency that mainly influences sales prices for goods and services and of the countrywhose competitive forces and regulations mainly determines the sales prices of itsgoods and services. The functional currencies of the entities in the Group aredetermined based on management’s assessment of the economic environment inwhich the entities operate and the entities’ process of determining sales prices.Management has assessed that prices are mainly denominated and settled in therespective local currency of the entities of the Group. In addition, most of the entities’cost base is mainly denominated in their respective local currency. Therefore,management concluded that the functional currency of the entities of the Group istheir respective local currency.

Consolidation of structured entities

In February 2015, the Group and a third party partner formed an entity to acquireland and construct and operate a fire equipment safety facility. The Group holds a20% equity interest in this entity. However, the Group has majority representation onthe entity’s board of directors and is required to approve all major operationaldecisions. The operations, once they commence, will be solely used by the Group.Based on these facts and circumstances, management concluded that the Groupcontrols this entity and, therefore, consolidates the entity in its financial statements.Additionally, the Group is effectively guaranteeing the returns to the third party. Theshares of the third party partner are recorded as a long term loan and return oninvestment is recorded as interest expense.

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 70

3. Significant accounting judgements and estimates (continued)

3.2 Key sources of estimation uncertainty Ê (continued)

The key assumptions concerning the future and other key sources of estimationuncertainty at the end of the reporting period are discussed below. The Group based itsassumptions and estimates on parameters available when the financial statementswere prepared. Existing circumstances and assumptions about future developments,however, may change due to market changes or circumstances arising beyond thecontrol of the Group. Such changes are reflected in the assumptions when they occur.

a) Fair value of unquoted available-for-sale financial assetsThe fair values of unquoted available-for-sale financial assets aredetermined using valuation techniques including the discounted cash flowmodel. The inputs to these models are derived from observable market datawhere possible, but where this is not feasible, a degree of judgement isrequired in establishing fair values. The assumptions applied indetermination of the valuation of these unquoted available-for-salefinancial assets and a sensitivity analysis are described in more detail inNote 39.

The carrying amount of the unquoted available-for-sale financial assets as at31 December 2015 is $1,702,000 (2014: $1,008,000).

b) Impairment of intangible assets

As disclosed in Note 15 to the financial statements, the recoverable amountsof the cash generating units which goodwill and brands have been allocated toare determined based on value in use calculations. The value in usecalculations are based on a discounted cash flow models. The recoverableamount is most sensitive to the discount rate used for the discounted cash flowmodel as well as the expected future cash inflows and the growth rate used forextrapolation purposes. The key assumptions applied in the determination ofthe value in use including a sensitivity analysis, are disclosed and furtherexplained in Note 15 to the financial statements.

The carrying amount of the intangible assets as at 31 December 2015 is$1,789,000 (2014: $495,000).

c) Revaluation of investment properties and property, plant and equipment

The Group carries its investment properties and property, plant and equipmentat fair value, with changes in fair values being recognised in profit or loss andother comprehensive income respectively. The Group engaged real estatevaluation experts to assess fair value as at 31 December 2015. The fair valuesof investment properties and property, plant and equipment are determined byindependent real estate valuation experts using recognised valuationtechniques. These techniques comprise both the Yield Method and theDiscounted Cash Flow Method. The key assumptions used to determine the fairvalue of these investment properties and property, plant and equipment andsensitivity analysis are provided in Note 39.

The carrying amounts of the investment properties and property, plant andequipment carried at fair value as at 31 December 2015 are $4,645,000(2014: $3,955,000) and $15,165,000 (2014: $14,300,000) respectively.

FRS 1.125

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 71

3. Significant accounting judgements and estimates (continued)

3.2 Key sources of estimation uncertainty Ê (continued)

Additional illustrative disclosures:

Key sources of estimation uncertainty

Ê In this illustration, it is assumed that these are the key assumptions and estimationuncertainty that have a significant risk of causing a material adjustment to the carryingamounts of the assets and liabilities within the next financial year.

Illustrative disclosures of other key sources of estimation uncertainty:

Deferred tax assets

Deferred tax assets are recognised for all unused tax losses to the extent that it isprobable that taxable profit will be available against which the losses can be utilised.Significant management judgement is required to determine the amount of deferredtax assets that can be recognised, based upon the timing and level of future taxableprofits together with future tax planning strategies. In determining the timing andlevel of future taxable profits together with future tax planning strategies, the Groupassessed the probability of expected future cash inflows based on expected revenuesfrom existing orders and contracts for the next 10 years.

Where taxable profits are expected in the foreseeable future, deferred tax assets arerecognised on the unused tax losses. The carrying value of recognised tax losses at31 December 2015 was $XXX (2014: $XXX) and the unrecognised tax losses at 31December 2015 was $XXX (2014: $XXX).

If the Group was able to recognise all unrecognised deferred tax assets, profit wouldincrease by $XXX (2014:$XXX).

Construction contracts

The Group recognises contract revenue by reference to the stage of completion ofthe contract activity at the end of each reporting period, when the outcome of aconstruction contract can be estimated reliably. The stage of completion ismeasured by reference to the proportion that contract costs incurred for workperformed to date to the estimated total contract costs. Significant assumptions arerequired to estimate the total contract costs and the recoverable variation worksthat affect the stage of completion. In making these estimates, management hasrelied on past experience and knowledge of the project engineers. The carryingamounts of assets and liabilities arising from construction contracts at the end ofeach reporting period are disclosed in Note X to the financial statements. If theestimated total contract cost had been 5% higher than management estimate, thecarrying amount of the assets and liabilities arising from construction contractswould have been $XXX (2014: $XXX) lower and $XXX (2014: $XXX) higherrespectively.

Provision for decommissioning

As part of the identification and measurement of assets and liabilities for theacquisition of XXX Limited in 2015, the Group has recognised a provision fordecommissioning obligations associated with a factory owned by XXX Limited. Indetermining the fair value of the provision, assumptions and estimates are made inrelation to discount rates, the expected cost to dismantle and remove plant from thesite and the expected timing of those costs. The carrying amount of the provision asat 31 December was $XXX (2014: $XXX). If the estimated pre-tax discount rateused in the calculation had been XX% higher than management’s estimate, thecarrying amount of the provision would have been $XXX (2014: $XXX) lower.

FRS 1.125

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 72

3. Significant accounting judgements and estimates (continued)

3.2 Key sources of estimation uncertainty Ê (continued)

Additional illustrative disclosures (continued):

Key sources of estimation uncertainty (continued)

Development costs

Development costs are capitalised in accordance with the accounting policy in NoteX. Initial capitalisation of costs is based on management’s judgement thattechnological and economic feasibility is confirmed, usually when a productdevelopment project has reached a defined milestone according to an establishedproject management model. In determining the amounts to be capitalised,management makes assumptions regarding the expected future cash generation ofthe project, discount rates to be applied and the expected period of benefits. As at31 December 2015, the carrying amount of development costs capitalised at theend of the reporting period was $XXX (2014: $XXX). If the expected future cashgeneration of the project had been 20% lower than management’s estimate, thecarrying amount of development costs would have been $XXX (2014: $XXX) lower.

Impairment of loans and receivables

The Group assesses at the end of each reporting period whether there is anyobjective evidence that a financial asset is impaired. Factors such as the probabilityof insolvency or significant financial difficulties of the debtor and default orsignificant delay in payments are objective evidence of impairment. In determiningwhether there is objective evidence of impairment, the Group considers whetherthere is observable data indicating that there have been significant changes in thedebtor’s payment ability or whether there have been significant changes withadverse effect in the technological, market, economic or legal environment in whichthe debtor operates in.

Where there is objective evidence of impairment, the amount and timing of futurecash flows are estimated based on historical loss experience for assets with similarcredit risk characteristics. The carrying amount of the Group’s loans and receivablesat the end of the reporting period is disclosed in Note 21 to the financial statements.If the present value of estimated future cash flows decrease by 10% frommanagement’s estimates, the Group’s allowance for impairment will increase by$XXX (2014: increase by $XXX).

Estimation of net realisable value for development property

Inventory property is stated at the lower of cost and net realisable value (NRV).

NRV in respect of development property under construction is assessed withreference to market prices at the reporting date for similar completed property lessestimated costs to complete construction and less an estimate of the time value ofmoney to the date of completion. The carrying amount of the development propertystated at net realisable value as at 31 December 2015 was $XXX (2014: $XXX). Ifthe estimated costs to complete construction increase by 20% from management’sestimate, the carrying amount of development property stated would reduce by$XXX (2014: $XXX).

FRS 1.125

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 73

4. Revenue

Group

2015$’000

2014$’000

Sale of goods 105,827 104,455 FRS 18.35.b.i

Construction revenue 30,893 38,116 FRS 11.39.a

136,720 142,571

5. Interest income ��

Group

2015

$’000

2014

$’000

Interest income from:

- Loans and receivables 355 255 FRS 107.20.a.iv

- Available-for-sale financial assets 48 47 FRS 107.20.a.ii

- Held-to-maturity investment 27 25 FRS 107.20.a.iii

430 327 FRS 107.20.a.b

Included in interest income from loans and receivables is interest of $98,000 (2014:$92,000) from an impaired loan to a fellow subsidiary (Note 21).

6. Other income �Ì

Group

2015$’000

2014$’000

Amortisation of deferred capital grants (Note 29) 239 180 FRS 20.39

Rental income from investment properties (Note 14) 345 291 FRS 40.75.f.i

Net gain from fair value adjustment of investment properties (Note 14) 489 129 FRS 40.76.d

Net gain on disposal of property, plant and equipment – 120 FRS 1.98.c

Net fair value gains on financial instruments:

- Held for trading investment securities 135 95 FRS 107.20.a.i

- Derivatives 43 56 FRS 107.20.a.i

- Available-for-sale financial assets (transferred from equity ondisposal of investment securities)� 120 15 FRS 107.20.a.ii

Gain on remeasurement of investment in associate to fair value uponbusiness combination achieved in stages (Note 17(d)) 140 – FRS 103.B64.p.ii

1,511 886

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 74

7. Finance costs

Group

2015$’000

2014$’000

Interest expense on:

- Bank loans, bonds and bank overdrafts 1,640 1,506 FRS 107.20.a.v

- Obligations under finance leases 75 30

- Convertible redeemable preference shares 62 59 FRS 107.20.a.v

1,777 1,595 FRS 107.20.b

Provisions discount adjustment (Note 28) 30 10

Less: interest expense capitalised in:

- Plant and equipment (Note 13) (57) (60) FRS 23.26.a

- Development property (Note 24) (35) (33) FRS 23.26.a

Total finance costs 1,715 1,512

8. Other expenses �Ì

The following items have been included in arriving at other expenses:

Group

2015$’000

2014$’000

Net loss on disposal of property, plant and equipment 76 – FRS 1.98.c

Impairment loss on property, plant and equipment (Note 13) 500 – FRS 1.98.a

Direct operating expenses arising from investment properties (Note 14) 72 65 FRS 40.75.f.ii

Fair value adjustment of contingent consideration of businesscombination (Note 17)� 235 - FRS 1.97

Net foreign exchange loss 136 145 FRS 21.52.a

Impairment loss on financial assets Í: FRS 107.20.e

- Trade receivables (Note 21) 135 115 FRS 107.20.e

- Loan to a fellow subsidiary (Note 21) – 100FRS 107.20.eFRS 24.18.d

- Available-for-sale investment securities (Note 22) 198 210 FRS 107.20.e

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 75

9. Profit before tax from continuing operations �

The following items have been included in arriving at profit before tax from continuingoperations:

Group

2015$’000

2014$’000

Audit fees: - Auditors of the Company 400 400

- Other auditors 50 50

Non-audit fees:

- Auditors of the Company 250 250

- Other auditors 30 30

Depreciation of property, plant and equipment 3,043 2,838

Amortisation of intangible assets (Note 15) 220 252

Transactions costs incurred in a business combination� 300 –

Employee benefits expense (Note 35) 20,502 19,024

Inventories recognised as an expense in cost of sales (Note 25) 80,567 82,122

Operating lease expense (Note 37(b)) 484 387

Utility charges� 1,428 1,486

Transportation charges� 2,450 2,584

Legal and other professional fees� 325 228

Commentary:Separate disclosure of income and expenses

Ê FRS 107.20.b only requires total income (calculated using the effective interest method) forfinancial assets that are not at fair value through profit or loss to be disclosed.

In this illustration, we have illustrated interest income aggregated by categories of financialasset. Although this level of aggregation is optional, when items of income and expense arematerial, their nature and amount should be disclosed separately.

� When items of income and expense are material, their nature and amount should be disclosedseparately. Circumstances that would give rise to the separate disclosure of items of incomeand expense include:

(a) Write-downs of inventories to net realisable value or of property, plant and equipment torecoverable amount, as well as reversals of such write-downs;

(b) Restructurings of the activities of an entity and reversals of any provisions for the costs ofrestructuring;

(c) Disposals of items of property, plant and equipment;(d) Disposals of investments;(e) Discontinued operations;(f) Litigation settlements; and(g) Other reversals of provisions.

FRS 1.97 and 104

SGX 1207.6a

SGX 1207.6a

FRS 1.104

FRS 1.104

FRS 1.97

FRS 1.104

FRS 2.36.d

FRS 17.35.c

FRS 1.97 and 104

FRS 1.97 and 104

FRS 1.97 and 104

FRS 107.20.b

FRS 1.97

FRS 1.97 and 98

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 76

9. Profit before tax from continuing operations � (continued)

Commentary (continued):

� An entity shall disclose the fee income and expense (other than amounts included indetermining the effective interest rate) arising from financial assets or financial liabilities thatare not at fair value through profit or loss and trust and other fiduciary activities that result inthe holding or investing of assets on behalf of individuals, trusts, retirement benefit plans, andother institutions, either on the face of the financial statements or in the notes.

� These expense items have been disclosed separately as they are considered to be material inthe assumed scenario due to their size or nature.

Reclassification adjustments

� In this illustration, the entity has chosen to disclose the reclassification adjustments andcurrent year gain or loss in the notes. An entity may choose to present this information in thestatement of comprehensive income itself.

Reclassification adjustments are amounts reclassified to profit or loss in the current periodthat were recognised in other comprehensive income in the current or previous periods. Suchamounts must be separately disclosed. For example, when an available-for-sale financial assetis sold, accumulated amounts previously recognised in fair value adjustment reserve will bereclassified into profit or loss for the period.

FRS 107.20.c

FRS 107.20.e

FRS 107.16

FRS 107.36

FRS 107.25

FRS 107.28

FRS 107.42D

FRS 107.6

FRS 107.B1

FRS 107.B2

FRS 107.6

FRS 1.97

FRS 1.94

FRS 1.7

FRS 1.92

FRS 1.93

Classes of financial instruments

� FRS 107 specifies a number of disclosure requirements on the following topics to beprovided by ‘class of financial instruments’:

- Impairment losses;

- Reconciliation of change in allowance account for credit losses if an entity choosesunder FRS 39 to have a separate allowance account;

- Credit risk;

- Fair value of financial instruments;

- Accounting policy for recognising any difference between fair value at initialrecognition and the amount that would be determined at that date using valuationtechnique and the aggregate difference yet to be recognised in profit or loss; and

- Transfers of financial assets that are not derecognised in their entirety.

FRS 107 requires an entity to group financial instruments into classes that areappropriate to the nature of information disclosed and that take into account thecharacteristics of those financial instruments. These classes are determined by thereporting entity and are distinct (usually lower in level) from the categories of financialinstruments (e.g., available-for-sale financial asset, loans and receivables) specified inFRS 39.

In determining classes of financial instruments, an entity shall, at a minimum:

- Distinguish instruments measured at amortised cost from those measured at fairvalue

- Treat as a separate class or classes those financial instruments outside the scope ofFRS 107

The entity is also required to provide sufficient information to permit reconciliation ofthe classes of financial instruments to the line items presented in the balance sheet.

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 77

10. Income tax expense

Major components of income tax expense

The major components of income tax expense for the years ended 31 December 2015and 2014 are:

Group

2015$’000

2014$’000

Consolidated income statement:

Current income tax – continuing operations:

- Current income taxation 1,422 1,344 FRS12.80.a

- (Over)/under provision in respect of previous years (50) 91 FRS 12.80.b

1,372 1,435

Deferred income tax – continuing operations (Note 20):

- Origination and reversal of temporary differences 191 260 FRS 12.80.c

- Benefits from previously unrecognised tax losses (6) (8) FRS 12.80.f

185 252

Income tax attributable to continuing operations 1,557 1,687

Income tax attributable to discontinued operation (Note 11) (7) (5) FRS 12.80.h

Income tax expense recognised in profit or loss 1,550 1,682

Statement of comprehensive income:

Group Company

2015$’000

2014$’000

2015$’000

2014$’000

Deferred tax expense related to other comprehensiveincome: FRS 12.81.ab

- Net gain on fair value changes of available-for-sale financial assets 56 26 – –

- Net surplus on revaluation of freehold land andbuildings 256 460 – – FRS 16.42

- Share of other comprehensive income ofassociates 13 2 – –

325 488 – –

Statement of changes in equity:

Deferred tax expense charged directly to equity:

- Convertible redeemable preference shares - 16 – 16 FRS 12.81.a

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 78

10. Income tax expense (continued)

Relationship between tax expense and accounting profit

A reconciliation between tax expense and the product of accounting profit multiplied bythe applicable corporate tax rate for the years ended 31 December 2015 and 2014 is asfollows: Ê

Group

2015$’000

2014$’000

Profit before tax from continuing operations 7,057 7,116

Loss before tax from discontinued operation (Note 11) (551) (193)

Accounting profit before tax 6,506 6,923

Tax at the domestic rates applicable to profits in the countries where theGroup operates� 1,322 1,571

Adjustments:

Non-deductible expenses� 560 473

Income not subject to taxation� (170) (388)

Effect of partial tax exemption and tax relief (35) (20)Deductions on treasury shares issued pursuant to employee share option

plan� (3) –

Deferred tax on convertible redeemable preference shares (4) (3)

Benefits from previously unrecognised tax losses (6) (8)

Deferred tax assets not recognised 46 21

(Over)/under provision in respect of previous years (50) 91

Share of results of associates (112) (56)

Others 2 1

Income tax expense recognised in profit or loss 1,550 1,682

The above reconciliation is prepared by aggregating separate reconciliations for eachnational jurisdiction.�

FRS 12.81.c.i

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 79

10. Income tax expense (continued)

Commentary:

Presentation of tax reconciliation

Ê Alternatively, an entity may present a numerical reconciliation between the average effectivetax rate (i.e., tax expense/income divided by the accounting profit) and the applicable tax rate,disclosing also the basis on which the applicable tax rate is computed.

Income tax rate for tax reconciliation

� In explaining the relationship between tax expense/income and accounting profit, an entityuses an applicable tax rate that provides the most meaningful information to the users of itsfinancial statements. Often, the most meaningful rate is the domestic rate of tax in thecountry in which the entity is domiciled, aggregating the tax rate applied for national taxeswith the rates applied for any local taxes which are computed on a substantially similar level oftaxable profit (tax loss). However, for an entity operating in several jurisdictions, it may bemore meaningful to aggregate separate reconciliations prepared using the domestic rate ineach individual jurisdiction.

Tax deduction for treasury shares transferred under employee share scheme

� A Singapore company is granted a tax deduction for the cost incurred in acquiring treasuryshares which are transferred to any person under a stock option scheme or share awardscheme by reason of any office or employment held in Singapore by that person.

Additional illustrative disclosures:

Disclosure of nature of expenses that are not deductible for income tax purposes

� The nature of :

- expenses that are not deductible for income tax purposes; and- income not subject to taxation

that give rise to a tax effect should be disclosed if the amount was material in accordance withFRS 1.29

Illustrative note disclosure on the nature of expenses that are not deductible for income taxpurposes :

The nature of expenses that are not deductible for income tax purposes are as follows:

Group

2015 2014

$’000 $’000Transaction costs related to acquisition of a

subsidiary XXX -

Exchange loss arising from revaluation of non-tradebalances XXX XXX

Private car expenses XXX XXX

Entertainment and transportation expenses incurredfor personal purposes XXX XXX

XXX XXX

FRS 12.81.c.ii and 86

FRS 12.85

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 80

11. Discontinued operation and disposal group classified as held for sale Ê

On 15 May 2015, the Company announced the decision of its board of directors todispose of one of its wholly-owned subsidiary, Good Fire Prevention Pte Ltd (GFP), whichwas previously reported in the fire prevention equipment and services segment. Thedecision is consistent with the Group’s strategy to focus on its core electronics andproperty businesses and to divest its fire prevention equipment business, which has beenunderperforming for the last five years. As at 31 December 2015, the assets andliabilities related to GFP have been presented in the balance sheet as “Assets of disposalgroup classified as held for sale” and “Liabilities directly associated with disposal groupclassified as held for sale”, and its results are presented separately on profit or loss as“Loss from discontinued operation, net of tax”. The disposal of GFP was completed on 15February 2015 (Note 44).

Balance sheet disclosures

The major classes of assets and liabilities of GFP classified as held for sale and the relatedasset revaluation reserve as at 31 December are as follows: ËÌ

Group

2015$’000

Assets:

Property, plant and equipment 1,016

Inventories 190

Trade and other receivables 814

Cash and short-term deposits 250

Assets of disposal group classified as held for sale 2,270

Liabilities:

Trade and other payables (1,043)

Deferred tax liabilities (28)

8.5% p.a. fixed rate SGD bank loan due 1 January 2015 (1,000)

Liabilities directly associated with disposal group classified as held for sale (2,071)

Net assets directly associated with disposal group classified as held for sale 199

Reserve:

Asset revaluation reserve 128

FRS 105.41.a, b and d

FRS 105.38 and 40

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 81

11. Discontinued operation and disposal group classified as held for sale Ê (continued)

Income statement disclosures

The results of GFP for the years ended 31 December are as follows: ËÌÍ

Group

2015$’000

2014$’000

Revenue 13,152 14,598 FRS 105.33.b.i

Expenses (12,983) (14,708) FRS 105.33.b.i

Profit/(loss) from operations 169 (110)

Finance costs (70) (83)

Impairment loss on deferred development costs (Note 15) (200) –

Loss recognised on remeasurement to fair value less costs to sell (450) –FRS 105.33.b.iiiand 41.c

Loss before tax from discontinued operation (551) (193) FRS 105.33.b.i

Taxation:

- Related to loss from ordinary activities of the discontinued operation 4 5FRS 105.33.b.iiFRS 12.81.h.ii

- Related to re-measurement to fair value less costs to sell 3 –FRS 105.33.b.iiiFRS 12.81.h.i

Loss from discontinued operation, net of tax (544) (188)

Cash flow statement disclosures

The cash flows attributable to GFP are as follows: ËÌÍ

Group

2015$’000

2014$’000

Operating (1,025) 483

Investing 268 (189)

Financing (137) (114)

Net cash (outflows)/inflows (894) 180

Loss per share disclosures

Group

2015$’000

2014$’000

Loss per share from discontinued operation attributable to owners ofthe Company (cents per share)�

Basic (2.35) (0.82) FRS 33.68

Diluted (2.30) (0.80) FRS 33.68

The basic and diluted loss per share from discontinued operation are calculated by dividingthe loss from discontinued operation, net of tax, attributable to owners of the Company bythe weighted average number of ordinary shares for basic earnings per share computationand weighted average number of ordinary shares for diluted earnings per sharecomputation respectively. These loss and share data are presented in the tables in Note12(a).

FRS 105.33.b

FRS 105.33.c

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 82

11. Discontinued operation and disposal group classified as held for sale Ê (continued)

Immediately before the classification of GFP as a discontinued operation, the recoverableamount was estimated for certain items of property, plant and equipment and noimpairment loss was identified. Following the classification, an impairment loss of$450,000 (2014: nil) was recognised to reduce the carrying amount of the assets in thedisposal group to the fair value less costs to sell. This amount was included as part of the“Loss from discontinued operation, net of tax“.

Commentary:

Ê FRS 5.5B clarifies that disclosure requirements in other FRSs do not apply to non-currentassets held for sale (or disposal groups) unless those FRSs explicitly refer to those assets anddisposals groups. Disclosure requirements continue to apply for assets and liabilities that arenot within the scope of the measurement requirements of FRS 105, but within the disposalgroup.

Discontinued operation and disposal group classified as held for sale

� These analysis/disclosures are not required for disposal groups that are newly acquiredsubsidiaries that meet the criteria to be classified as held for sale on acquisition.

� Alternatively, these analysis/disclosures may be presented on the face of the financialstatements. If so presented for the purposes of the statement of comprehensive income, aseparate section identified as relating to discontinued operations is required.

� An entity should re-present the disclosures in FRS 105.33 for prior periods presented in thestatement of comprehensive income and cash flow statement so that the disclosures relate toall operations that have been discontinued by the end of the reporting period for the latestperiod presented.

Loss per share from discontinued operation

� In this illustration, loss per share from discontinued operations has been presented in the note.Alternatively, this information may be presented on the face of the statement ofcomprehensive income.

12. Earnings per share Ê

a) Continuing operations

Basic earnings per share from continuing operations are calculated by dividing profitfrom continuing operations, net of tax, attributable to owners of the Company by theweighted average number of ordinary shares outstanding during the financial year.

Diluted earnings per share from continuing operations are calculated by dividing profitfrom continuing operations, net of tax, attributable to owners of the Company (afteradjusting for interest expense on convertible redeemable preference shares) by theweighted average number of ordinary shares outstanding during the financial year plusthe weighted average number of ordinary shares that would be issued on theconversion of all the dilutive potential ordinary shares into ordinary shares.

The following tables reflect the profit and share data used in the computation of basicand diluted earnings per share for the years ended 31 December:

FRS 105.5B

FRS 105.5B.b

FRS 105.33.b and 39

FRS 105.33.b

FRS 105.34

FRS 33.68

FRS 33.10 and 12

FRS 33.31 and 33

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 83

12. Earnings per share Ê (continued)

a) Continuing operations (continued)

Group

2015$’000

2014

$’000

Profit for the year attributable to owners of the Company 4,776 4,841Add back: Loss from discontinued operation, net of tax, attributable

to owners of the Company� 544 188

Profit from continuing operations, net of tax, attributable to ownersof the Company used in the computation of basic earnings per sharefrom continuing operations 5,320 5,029

Interest expense on convertible redeemable preference shares� 62 59Profit from continuing operations, net of tax, attributable to owners

of the Company used in the computation of diluted earnings pershare 5,382 5,088

No. ofshares‘000

No. ofshares‘000

Weighted average number of ordinary shares for basic earnings pershare computation * 23,150 23,055

Effects of dilution��:

- Share options 18 15

- Convertible redeemable preference shares 505 505Weighted average number of ordinary shares for diluted earnings per

share computation * 23,673 23,575

* The weighted average number of shares takes into account the weighted averageeffect of changes in treasury shares transactions during the year.

325,000 (2014: 200,000) share options granted to employees under the existingemployee share option plans have not been included in the calculation of dilutedearnings per share because they are anti-dilutive.

Since the end of the financial year, senior executives have exercised the options toacquire 2,000 (2014: nil) ordinary shares. There have been no other transactionsinvolving ordinary shares or potential ordinary shares since the reporting date andbefore the completion of these financial statements.�

b) Earnings per share computation

The basic and diluted earnings per share are calculated by dividing the profit for the yearattributable to owners of the Company by the weighted average number of ordinaryshares for basic earnings per share computation and dividing the profit for the yearattributable to owners of the Company adjusted for interest expense on convertibleredeemable shares by the weighted average number of ordinary shares for dilutedearnings per share computation respectively. These profit and share data arepresented in the tables in Note 12(a) above.

FRS 33.70.a

FRS 33.12

FRS 33.70.b

FRS 33.70.b

FRS 33.70.b

FRS 33.70.c

FRS 33.70.d

FRS 33.70.a and b

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 84

12. Earnings per share Ê (continued)

Commentary:

Earnings per share

Ê If the number of ordinary or potential ordinary shares outstanding increases as a result of acapitalisation, bonus issue or share split, or decreases as a result of a reverse share split, thecalculation of basic and diluted earnings per share for all periods presented shall be adjustedretrospectively. If these changes occur after the end of the reporting period but before thefinancial statements are authorised for issue, the per share calculations for current and priorperiod presented shall be based on the new number of shares and this fact should bedisclosed. In addition, basic and diluted earnings per share of all periods presented shall beadjusted for the effects of errors and adjustments resulting from changes in accountingpolicies accounted for retrospectively.

� In this illustration, it is assumed that the profit or loss from discontinued operation is notattributable to non-controlling interests.

Ì The objective of diluted earnings per share is consistent with that of basic earnings per sharewhich is to provide a measure of the interest of each ordinary share in the performance of anentity while giving effect to all dilutive potential ordinary shares outstanding during theperiod. As a result:

(a) profit or loss attributable to ordinary equity holders of the parent entity is increased bythe after-tax amount of dividends and interest recognised in the period in respect of thedilutive potential ordinary shares and is adjusted for any other changes in income orexpense that would result from the conversion of the dilutive potential ordinary shares;and

(b) the weighted average number of ordinary shares outstanding is increased by the weightedaverage number of additional ordinary shares that would have been outstanding assumingthe conversion of all dilutive potential ordinary shares.

Í Potential ordinary shares shall be treated as dilutive only when their conversion to ordinaryshares would decrease earnings per share or increase loss per share from continuingoperations.

Î An entity shall disclose a description of ordinary share transactions or potential ordinary sharetransactions, other than those resulted from share capitalisation, bonus issue or share split,that occur after the end of the reporting period and that would have changed significantly thenumber of ordinary shares or potential ordinary shares outstanding at the end of the period ifthose transactions had occurred before the end of the reporting period.

Example of such transactions include:

- An issue of shares for cash;

- An issue of shares when the proceeds are used to repay debt or preference sharesoutstanding at the end of the reporting period;

- The redemption of ordinary shares outstanding;

- The conversion or exercise of potential ordinary shares outstanding at the end of thereporting period into ordinary shares;

- An issue of options, warrants, or convertible instruments; and

- The achievement of conditions that would result in the issue of contingently issuableshares.

Earnings per share amounts are not adjusted for such transactions occurring after the end ofthe reporting period because such transactions do not affect the amount of capital used toproduce profit or loss for the period.

FRS 33.64

FRS 33.32

FRS 33.41

FRS 33.70.d

FRS 33.71

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 85

13. Property, plant and equipment ÊÊ

GroupFreehold

land BuildingsPlant and

equipment

Furnitureand

fixtures Total

$’000 $’000 $’000 $’000 $’000

Cost or valuation: At valuation At cost FRS 16.73.a

At 1 January 2014 7,468 1,075 25,079 2,331 35,953 FRS 16.73.d

Additions 1,160 1,824 1,028 441 4,453 FRS 16.73.e.i

Disposals – – (2,054) – (2,054) FRS 16.73.e.ii

Revaluation surplus 2,128 740 – – 2,868 FRS 16.73.e.ivElimination of accumulated depreciation on

revaluation – (50) – – (50) FRS 16.35.b

Exchange differences (30) (15) (120) (20) (185) FRS 16.73.e.viii

At 31 December 2014 and 1 January 2015 10,726 3,574 23,933 2,752 40,985 FRS 16.73.d

Additions 4,000 1,194 2,008 1,252 8,454 FRS 16.73.e.i

Transfer from investment properties (Note 14) – 300 – – 300 FRS 16.73.e.ix

Disposals (3,068) (1,710) (3,328) – (8,106) FRS 16.73.e.ii

Acquisition of a subsidiary (Note 17) – – 1,111 158 1,269 FRS 16.73.e.iii

Attributable to discontinued operation(Note 11) (1,010) (310) (377) (150) (1,847) FRS 16.73.e.ii

Revaluation surplus 1,206 300 – – 1,506 FRS 16.73.e.ivElimination of accumulated depreciation on

revaluation – (67) – – (67) FRS 16.35.b

Exchange differences 20 10 50 12 92 FRS 16.73.e.viii

At 31 December 2015 11,874 3,291 23,397 4,024 42,586 FRS 16.73.d

Accumulated depreciation and impairment loss:

At 1 January 2014 – – 6,461 1,337 7,798 FRS 16.73.d

Depreciation charge for the year – 50 2,558 230 2,838 FRS 16.73.e.vii

Disposals – – (615) – (615) FRS 16.73.e.iiElimination of accumulated depreciation on

revaluation – (50) – – (50) FRS 16.35.b

Exchange differences – – (40) (10) (50) FRS 16.73.e.viii

At 31 December 2014 and 1 January 2015 – – 8,364 1,557 9,921 FRS 16.73.d

Depreciation charge for the year – 115 2,628 300 3,043 FRS 16.73.e.vii

Impairment loss – – 500 – 500 FRS 16.73.e.v

Disposals – (10) (1,153) – (1,163) FRS 16.73.e.ii

Attributable to discontinued operation(Note 11) – (38) (245) (98) (381) FRS 16.73.e.ii

Elimination of accumulated depreciation onrevaluation – (67) – – (67) FRS 16.35.b

Exchange differences – – 10 5 15 FRS 16.73.e.viii

At 31 December 2015 – – 10,104 1,764 11,868 FRS 16.73.d

Net carrying amount:

At 31 December 2014 10,726 3,574 15,569 1,195 31,064

At 31 December 2015 11,874 3,291 13,293 2,260 30,718

FRS 1.77 and 78.a

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 86

13. Property, plant and equipment ÊÊ (continued)

CompanyFurniture

and fixtures

$’000

Cost: FRS 16.73.a

At 1 January 2014 1,166 FRS 16.73.d

Additions 221 FRS 16.73.e.i

At 31 December 2014 and 1 January 2015 1,387 FRS 16.73.d

Additions 626 FRS 16.73.e.i

At 31 December 2015 2,013 FRS 16.73.d

Accumulated depreciation:

At 1 January 2014 669 FRS 16.73.d

Depreciation charge for the year 115 FRS 16.73.e.vii

At 31 December 2014 and 1 January 2015 784 FRS 16.73.d

Depreciation charge for the year 150 FRS 16.73.e.vii

At 31 December 2015 934 FRS 16.73.d

Net carrying amount:

At 31 December 2014 603

At 31 December 2015 1,079

Assets under construction

The Group’s plant and equipment included $800,000 (2014: $750,000) which relate toexpenditure for a plant in the course of construction.

Capitalisation of borrowing costs

The Group’s plant and equipment include borrowing costs arising from bank loansborrowed specifically for the purpose of the construction of a plant and equipment. Duringthe financial year, the borrowing costs capitalised as cost of plant and equipmentamounted to $57,000 (2014: $60,000). The rate used to determine the amount ofborrowing costs eligible for capitalisation was 4.5% (2014: 5.0%), which is the effectiveinterest rate of the specific borrowing.�

Revaluation of freehold land and buildings

The Group engaged Chartered Surveyors Pte Ltd, an independent valuer to determine thefair value of the freehold land and buildings. The date of the revaluation was 31 December2015 (2014: 31 December 2014). Details of valuation techniques and inputs used aredisclosed in Note 39.

If the freehold land and buildings were measured using the cost model, the carryingamounts would be as follows:

Group

2015

$’000

2014

$’000

Freehold land at 31 December:

- Cost and net carrying amount 9,560 8,336

Buildings at 31 December:

- Cost 2,730 3,048

- Accumulated depreciation and impairment (150) (200)

- Net carrying amount 2,580 2,848

FRS 16.74.b

FRS 23.26.a

FRS 23.26 b

FRS 16.77.a-b

SGX 1207.11

FRS 16.77.e

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 87

13. Property, plant and equipment ÊÊ (continued)

Assets held under finance leases

During the financial year, the Group acquired plant and equipment and furniture andfixtures with an aggregate cost of $1,028,000 (2014: $95,000) by means of financeleases. The cash outflow on acquisition of property, plant and equipment amounted to$7,426,000 (2014: $4,358,000).

The carrying amount of plant and equipment and furniture and fixtures held under financeleases at the end of the reporting period were $815,000 (2014: $65,000) and $85,000(2014: $30,000) respectively.

Leased assets are pledged as security for the related finance lease liabilities.

Assets pledged as security

In addition to assets held under finance leases, the Group’s freehold land and buildingswith a carrying amount of $7,822,000 (2014: $6,833,000) are mortgaged to secure theGroup’s bank loans (Note 30).

Impairment of assets

During the financial year, a subsidiary of the Group within the electronic componentssegment, XYZ Vietnam Ltd carried out a review of the recoverable amount of itsproduction equipment because a particular line of specialised electronic componentproducts had been persistently making losses. An impairment loss of $500,000 (2014:nil), representing the write-down of these equipment to the recoverable amount wasrecognised in “Other expenses” (Note 8) line item of profit or loss for the financial yearended 31 December 2015. The recoverable amount of the production equipment wasbased on its value in use and the pre-tax discount rate used was 12.4% (2014: 11.2%).

Commentary:

Ê Entities are also encouraged to disclose the following information, which users of financialstatements may find relevant to their needs:

- The carrying amount of temporarily idle property, plant and equipment;- The gross carrying amount of any fully depreciated property, plant and equipment that is still

in use;- The carrying amount of property, plant and equipment retired from active use and not

classified as held for sale in accordance with FRS 105; and- When the cost model is used, the fair value of property, plant and equipment when this is

materially different from the carrying amount.

Ë If the amount of borrowing costs eligible for capitalisation have been determined by applying acapitalisation rate to the expenditures on a qualifying asset because funds used for thepurpose of obtaining the qualifying asset are borrowed generally (rather than specifically), thecapitalisation rate should be the weighted average of the borrowing costs applicable to theborrowings of the entity that are outstanding during the period, other than borrowings madespecifically for the purpose of obtaining a qualifying asset. The amount of borrowing costscapitalised during a period should not exceed the amount of borrowing costs incurred duringthat period.

FRS 7.43

FRS 17.31.a

FRS 16.74.a

FRS 16.74.a

FRS 36.126.a,130.a-c, e and g

FRS 16.79

FRS 23.14 and26.b

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 88

13. Property, plant and equipment ÊÊ (continued)

Additional illustrative disclosures:

Changes in estimates

Ê In this illustration, there was no change in the useful life of property, plant and equipment ofthe Group. Where applicable, an entity should disclose the nature and effect of a change inaccounting estimate that has an effect in the current or subsequent periods.

Illustrative note disclosure for change in estimated useful life of equipment:

During the financial year, the Group conducted an operational efficiency review on itsproduction lines. The Group revised the estimated useful lives of some automationmachines from five to eight years, after refurbishments that will enable these automationmachines to remain in production for an additional three years. The revision in estimatehas been applied on a prospective basis from 1 January 2014. The effect of the aboverevision on depreciation charge in current and future periods are as follows:

2015$’000

2016$’000

2017$’000

Later$’000

Decrease in depreciation expense (xxx) (xxx) (xxx) (xxx)

14. Investment properties Ê

Group

2015$’000

2014$’000

Balance sheet: FRS 40.76

At 1 January 3,955 3,825

Additions (subsequent expenditure)� 500 – FRS 40.76a

Net gains from fair value adjustments recognised in profit or loss 489 129 FRS 40.76.d

Transfer to property, plant and equipment (Note 13) (300) – FRS 40.76.f

Exchange differences 1 1 FRS 40.76.e

At 31 December 4,645 3,955

Income statement:

Rental income from investment properties:

- Minimum lease payments 324 246

- Contingent rent based on tenant’s turnover 21 45 FRS 17.56.b

345 291 FRS 40.75.f.i

Direct operating expenses (including repairs and maintenance) arisingfrom:

- Rental generating properties (60) (55) FRS 40.75.f.ii

- Non-rental generating properties (12) (10) FRS 40.75.f.iii

(72) (65)

The Group has no restrictions on the realisability of its investment properties and nocontractual obligations to purchase, construct or develop investment property or forrepairs, maintenance or enhancements.

FRS 8.39FRS 16.76

FRS 40.75.gFRS 40.75.h

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 89

14. Investment properties Ê (continued)

Valuation of investment properties

Investment properties are stated at fair value, which has been determined based onvaluations� performed as at 31 December 2015 and 31 December 2014. The valuationswere performed by Chartered Surveyors Pte Ltd, an independent valuer � with arecognised and relevant professional qualification and with recent experience in thelocation and category of the properties being valued. Details of valuation techniques andinputs used are disclosed in Note 39.

Properties pledged as security

Certain investment properties amounting to $2,145,000 (2014: $2,055,000) aremortgaged to secure bank loans (Note 30).

Transfer to property, plant and equipment

On 30 December 2015, the Group transferred one condominium unit that was held asinvestment property to owner-occupied property. On that date, the Group hascommenced using the condominium unit for employee accommodation purposes.

The investment properties held by the Group as at 31 December are as follows: �

Description and Location Existing Use TenureUnexpiredlease term

8-storey shopping podium, 3 basements and twin 27-storeyoffice towers along South Park, Singapore

Shops Leasehold 983 years

Five condominium units, River Valley, Singapore Residential Leasehold 92 years

18-storey office tower along Xujing Road, Qingpu District,Shanghai

Offices Leasehold 58 years

Commentary

Contractual obligations relating to investment properties

Ê Contractual obligations to purchase, construct or develop investment property or for repairs,maintenance or enhancements should be disclosed, if applicable.

Additions to investment properties

� Additions to investment properties resulting from: i) acquisitions of properties; ii) subsequentexpenditure recognised in the carrying amount of an asset; and iii) acquisitions through businesscombinations should be disclosed separately.

Valuation of investment properties

� When a valuation obtained for investment property is adjusted significantly for the purpose ofthe financial statements, for example to avoid double-counting of assets or liabilities that arerecognised as separate assets and liabilities, the entity should disclose a reconciliation betweenthe valuation obtained and the adjusted valuation included in the financial statements, showingseparately the aggregate amount of any recognised lease obligations that have been addedback, and any other significant adjustments.

� If there has been no such valuation performed by an independent valuer, that fact should bedisclosed.

List of properties held for investment� This disclosure is only required for entities listed on the SGX-ST, where the aggregate value for

all properties for development, sale or for investment purposes held by the entity representmore than 15% of the value of the consolidated net tangible assets, or contribute more than15% of the consolidated pre-tax operating profit. This disclosure may be included in other partsof the entity’s annual report instead.

FRS 40.75.aFRS 40.75.e

FRS 40.75.g

SGX 1207.11.b

FRS 40.75.h

FRS 40.76.a andb

FRS 40.77

FRS 40.75.e

SGX 1207.11

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 90

15. Intangible assets Ê

Group

Goodwill BrandsClub

Membership

DeferredDevelopment

Costs TotalFRS 1.77

$’000 $’000 $’000 $’000 $’000

Cost:

At 1 January 2014 245 240 100 984 1,569 FRS 38.118.c

Additions – internal development – – – 200 200 FRS 38.118.e.i

Exchange differences 5 5 – 12 22 FRS 38.118.e.vii

At 31 December 2014 and 1 January 2015 250 245 100 1,196 1,791 FRS 38.118.c

Additions:

- Internal development – – – 200 200 FRS 38.118.e.i

- Acquisition of a subsidiary (Note 17) 772 500 – – 1,272 FRS 38.118.e.i

Attributable to discontinued operation – – – (250) (250) FRS 38.118.e.ii

Exchange differences 15 7 – 14 36 FRS 38.118.e.vii

At 31 December 2015 1,037 752 100 1,160 3,049 FRS 38.118.c

Accumulated amortisation and impairment:

At 1 January 2014 – – 70 131 201 FRS 38.118.c

Amortisation – – 10 242 252 FRS 38.118.e.vi

Exchange differences – – – 5 5 FRS 38.118.e.vii

At 31 December 2014 and 1 January 2015 – – 80 378 458 FRS 38.118.c

Amortisation – – 10 210 220 FRS 38.118.e.vi

Impairment loss – – – 200 200FRS 36.130.bFRS 38.118.e.iv

Attributable to discontinued operation – – – (250) (250) FRS 38.118.e.ii

Exchange differences – – – 2 2 FRS 38.118.e.vii

At 31 December 2015 – – 90 540 630 FRS 38.118.c

Net carrying amount:

At 31 December 2014 250 245 20 818 1,333

At 31 December 2015 1,037 752 10 620 2,419 FRS 38.122.b

Brands and deferred development costs

Brands relate to the “Gao-Feng”, “You-Yue” and “MSAX-Q” (acquired in 2014) brandnames for the Group’s specialised electronic components that were acquired in businesscombinations. As explained in Note 2.9(b)(i), the useful life of these brands is estimated tobe indefinite.

Deferred development costs relate to energy efficiency improvement projects foranalogue electronic components and have an average remaining amortisation period offour years (2014: five years).

All research costs and development costs not eligible for capitalisation have beenexpensed and are recognised in ‘Research and development’ line item in profit or loss.

FRS 38.122.b

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 91

15. Intangible assets Ê (continued)

Amortisation expense

The amortisation of deferred development costs and club membership is included in the“Research and development” and “Administrative expenses” line items in profit of lossrespectively.

Impairment testing of goodwill and brands

Goodwill acquired through business combinations and brands have been allocated to twocash-generating units (CGU), which are also the reportable operating segments, forimpairment testing as follows:

- Electronic components segment

- Property segment

The carrying amounts of goodwill and brands allocated to each CGU are as follows: �

Electroniccomponents

segmentPropertysegment Total

2015

$’000

2014

$’000

2015

$’000

2014

$’000

2015

$’000

2014

$’000

Goodwill 782 – 255 250 1,037 250

Brands 752 245 – – 752 245

The recoverable amounts of the CGUs have been determined based on value in use ��calculations using cash flow projections from financial budgets approved by managementcovering a five-year period. The pre-tax discount rate applied to the cash flow projectionsand the forecasted growth rates used to extrapolate cash flow projections beyond thefive-year period are as follows:

Electroniccomponents segment

Propertysegment

2015 2014 2015 2014

Growth rates� 5.1% 4.8% 6.1% 5.5%

Pre-tax discount rates 11.3% 11.1% 12.3% 12.8%

Key assumptions used in the value in use calculations

The calculations of value in use for both the CGUs are most sensitive to the followingassumptions:�

Budgeted gross margins – Gross margins are based on average values achieved in thethree years preceding the start of the budget period. These are increased over the budgetperiod for anticipated efficiency improvements. An increase of 1.5% per annum wasapplied for the electronic components segment and 2.2% for the property segment.

Growth rates – The forecasted growth rates are based on published industry research anddo not exceed the long-term average growth rate for the industries relevant to the CGUs.

FRS 38.118.d

FRS 36.80.b

FRS 36.134.a

FRS 36.134.b

FRS 36.130.e. 134.cand d.iii

FRS 36.134.d.iv

FRS 36.134.d.v

FRS 36.134.d.i

FRS 36.134.d.i and ii

FRS 36.134.d.i,ii andiv

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 92

15. Intangible assets Ê (continued)

Impairment testing of goodwill and brands (continued)

Key assumptions used in the value in use calculations (continued)

Pre-tax discount rates – Discount rates represent the current market assessment of therisks specific to each CGU, regarding the time value of money and individual risks of theunderlying assets which have not been incorporated in the cash flow estimates. Thediscount rate calculation is based on the specific circumstances of the Group and itsoperating segments and derived from its weighted average cost of capital (WACC). TheWACC takes into account both debt and equity. The cost of equity is derived from theexpected return on investment by the Group’s investors. The cost of debt is based on theinterest bearing borrowings the Group is obliged to service. Segment–specific risk isincorporated by applying individual beta factors. The beta factors are evaluated annuallybased on publicly available market data.

Market share assumptions – These assumptions are important because, as well as usingindustry data for growth rates (as noted above), management assesses how the CGU’sposition, relative to its competitors, might change over the budget period. Managementexpects the Group’s share of the electronics and property markets to be stable over thebudget period.

Sensitivity to changes in assumptions�

With regards to the assessment of value in use for the property segment, managementbelieves that no reasonably possible changes in any of the above key assumptions wouldcause the carrying value of the unit to materiality exceed its recoverable amount.

For the electronic components segment, the estimated recoverable amount exceeds itscarrying amount by approximately $200,000 (2014: $150,000) and, consequently, anyadverse change in a key assumption would result in a further impairment loss. Theimplication of the key assumption for the recoverable amount is discussed below:

Growth rates – Management recognises that the speed of technological change and thepossibility of new entrance can have a significant impact on growth rate assumptions. Theeffect of new entrance is not expected to have an adverse impact on the forecasts, butcould yield a reasonably possible alternative to the estimated long-term growth rate of5.1% (2014: 4.8%). A reduction of 0.8% (2014: 0.9%) in the long-term growth rate wouldresult in a further impairment.

Impairment loss recognised

During the financial year, an impairment loss was recognised to write-down the carryingamount of deferred development costs attributable to the fire prevention equipmentsegment that has been classified as discontinued operation (Note 11). The impairmentloss of $200,000 (2014: nil) has been recognised in profit or loss under the line item “lossfrom discontinued operation, net of tax”.

FRS 36.134.d.i and ii

FRS 36.134.d.i and ii

FRS 36.134.f.i

FRS 36.134.f.ii

FRS 36.134.f.iii

FRS 36.126.a,FRS 36.130.a-c

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 93

15. Intangible assets Ê (continued)

Commentary:

Description of intangible assets

Ê The disclosure of a description, the carrying amount and remaining amortisation period arerequired for any individual intangible asset that is material to the entity’s financialstatements.

� If some or all of the carrying amount of goodwill or intangible assets with indefinite usefullives is allocated across multiple CGUs (groups of units), and the amount so allocated to eachunit (group of units) is not significant in comparison with the entity’s total carrying amount ofgoodwill or intangible assets with indefinite useful lives, that fact shall be disclosed, togetherwith the aggregate carrying amount of goodwill or intangible assets with indefinite usefullives allocated to those CGUs (group of units). In addition, if the recoverable amounts of anyof those CGUs (group of units) are based on the same key assumption(s) and the aggregatecarrying amount of goodwill or intangible assets with indefinite useful lives allocated to themis significant in comparison with the entity’s total carrying amount of goodwill or intangibleassets with indefinite useful lives, an entity shall disclose that fact, together with:

(a) The aggregate carrying amount of goodwill allocated to those units (groups of units)

(b) The aggregate carrying amount of intangible assets with indefinite useful lives allocatedto those units (groups of units)

(c) A description of the key assumption(s)

(d) A description of management’s approach to determining the value(s) assigned to thekey assumption(s), whether those value(s) reflect past experience or, if appropriate,are consistent with external sources of information, and, if not, how and why they differfrom past experience or external sources if information.

(e) If a reasonably possible change in the key assumption(s) would cause the aggregate ofthe units’ (groups of units’) carrying amounts to exceed the aggregate of theirrecoverable amounts:

(i) The amount by which the aggregate of the units’ (group of units’) recoverableamounts exceeds the aggregate of their carrying amounts.

(ii) The value(s) assigned to the key assumption(s).

(iii) The amount by which the value(s) assigned to the key assumption(s) must change,after incorporating any consequential effects of the change on the other variablesused to measure recoverable amount, in order for the aggregate of the unit’s(groups of units’) recoverable amounts to be equal to the aggregate of theircarrying amounts.

� Provided specified criteria are met, if the most recent detailed calculation made in apreceding period of the recoverable amount of a CGU (group of units) is used in theimpairment test for that unit (group of units) in the current period, the disclosures requiredin the financial statements by paragraphs 134 and 135 relate to the carried forwardcalculation of recoverable amount.

Sensitivity to changes in assumptions

� If a reasonably possible change in any key assumptions used by management would cause thecarrying values of CGUs to materially exceed the recoverable amounts, an entity shoulddisclose

- the amount by which the CGU’s recoverable amount exceeds its carrying amount,

- the value assigned to the key assumption,

the amount by which the value assigned to the key assumption must change, afterincorporating any consequential effects of that change on the other variables used tomeasure recoverable amount, in order for the CGU’s recoverable amount to be equal to itscarrying amount.

FRS 38.122.b

FRS 36.135

FRS 36.136

FRS 36.134.f

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 94

15. Intangible assets Ê (continued)

Additional illustrative disclosures:

Recoverable amount of CGU containing goodwill or intangible assets with indefinite livesdetermined based on fair value less costs to sell (continued)

� In this illustration, the recoverable amounts of such CGUs were determined based on value inuse calculations. If an entity uses fair value less costs of disposal to measure the recoverableamount of CGU and the fair value less costs of disposal is not determined using a quotedprice, the entity should disclose the valuation technique(s) and other information including:the key assumption used; a description of management’s approach to each key assumption(whether those values reflect past experience or are consistent with external information,and if not, how and why they differ); the level of fair value hierarchy and the reason(s) forchanging valuation techniques, if there is any change, are required to be provided in thefinancial statements.

Illustrative note disclosure:

The recoverable amounts of CGU A, CGU B and CGU C are determined based on fair valueless costs of disposal of the CGUs. To calculate these values, an appropriate multiple wasapplied to the maintainable operating earnings of the CGUs. The fair value less costs ofdisposal of the CGUs are determined by applying an appropriate market multiple to itsearnings before interest, tax, depreciation and amortisation (EBITDA), whichmanagement believes is sustainable in view of the current and anticipated businessconditions.

The fair value less costs of disposal of CGU A, CGU B and CGU C are estimated based oncurrent EBITDAs and market multiple of X.XX. The market multiples are calculated basedon the median of comparable companies’ indications, after adjustments for differences inrisks and growth. The control premium of XX% was calculated based on the investmentclimate, industry dynamic and recent comparable transactions. The discount rate of XX%has been derived based on studies of liquidity discounts and adjusted for the size of theCompany. The fair value derived is categorises under Level 3 of the fair value hierarchy.

If fair value less costs to sell is determined using discounted cash flow projections, thefollowing information shall also be disclosed:

- The period over which management has projected cash flows

- The growth rate used to extrapolate cash flow projections

- The discount rate(s) applied to the cash flow projections

Forecasted growth rates used to extrapolate cash flow projections beyond the five-year period

Ë The entity is required to disclose the justification if the growth rate used to extrapolate cashflows projections beyond the period covered by the most recent budgets/forecasts exceedsthe long-term average growth rate for the products, industries, or countries in which theentity operates.

Illustrative note disclosure:

The growth rate used to extrapolate the cash flows of the electronics componentsegment exceeds the average growth rate for the industry in which the electronicssegment operates by three quarters of a percentage point. Management of theelectronics component segment believes this growth rate is justified based on theacquisition of XXX Limited that has resulted in the control of an industry patent,preventing other entities from manufacturing a specialised product for a period of 10years with the option for renewal after the 10 years period have expired.

FRS 36.134.e

FRS 36.134.d.iv

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 95

16. Land use rights

Group

2015$’000

2014$’000

Cost:

At 1 January 6,500 6,360

Exchange differences 220 140

At 31 December 6,720 6,500

Accumulated amortisation:

At 1 January 767 630

Amortisation for the year 132 130

Exchange differences 10 7

At 31 December 909 767

Net carrying amount 5,811 5,733

Amount to be amortised:

- Not later than one year 137 132

- Later than one year but not later than five years 548 528

- Later than five years 5,126 5,073

The Group has land use rights over two plots of state-owned land in People’s Republic ofChina (PRC) where the Group’s PRC manufacturing and storage facilities reside. The landuse rights are not transferable and have a remaining tenure of 43 years (2014: 44 years).

17. Investment in subsidiaries Ê�ÑÒ

Company

2015$’000

2014$’000

Shares, at cost 11,132 11,042

Discount on loans to subsidiaries 540 540

Issuance of shares for acquisition of subsidiary 1,475 –

Impairment losses� (1,000) (1,000)

12,147 10,582

FRS 17.35.a

FRS 17.35.d

FRS 27.10.a

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 96

17. Investment in subsidiaries ÊËÑÒ (continued)

a. Composition of the Group

The Group has the following significant investments in subsidiaries.

Name

Principalplace of

business� Principal activities

Proportion (%)of ownership

interest�

2015 2014

Held by the Company:

XYZ Technologies Pte Ltd i Singapore Manufacture of electroniccomponents

100 100

XYZ Investment Pte Ltd i Singapore Investment holding 100 100

XYZ Land Pte Ltd i Singapore Investment holding 100 100

Good Fire Prevention PteLtd i

Singapore Installation of fireprevention equipmentand provision ofinstallation services

100 100

Held through XYZ Technologies Pte Ltd:

XYZ China Co. Ltd ii People’sRepublicof China

Manufacture of electroniccomponents

75 75

XYZ Vietnam Ltd ii Vietnam Manufacture of electroniccomponents

100 80

MSAX Sdn Bhd ii Malaysia Manufacture of electroniccomponents

80 -*

Held through XYZ Land Pte Ltd:

XYZ Developers Pte Ltd i Singapore Property development 100 100

XYZ Constructors Sdn Bhd ii Malaysia Property development 100 100

Lion Land Pte Ltd i Singapore Property investment 100 100

i Audited by Ernst & Young LLP, Singapore

ii Audited by member firms of EY Global in the respective countries

* The Group holds 25% ownership interest in MSAX Sdn Bhd in 2014 and account for it as an associate(Note 19).

FRS 27.43.bFRS 24.12

SGX 717

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 97

17. Investment in subsidiaries ÊËÑÒ (continued)

b. Interest in subsidiaries with material non-controlling interest (NCI)

The Group has the following subsidiaries that have NCI that are material to theGroup.

Name ofSubsidiary

Principalplace of

business�

Proportion ofownership

interest heldby non-

controllinginterest�

Profit/(Loss)allocated toNCI during

the reportingperiod$’000

AccumulatedNCI at the

end ofreporting

period$’000

Dividendspaid to

NCI

$’00031 December 2015:

XYZ ChinaCo. Ltd

People’sRepublic ofChina

25% 120 1,220 100

MSAX SdnBhd

Malaysia 20% 40 400 30

31 December 2014:

XYZ ChinaCo. Ltd

People’sRepublic ofChina

25% 270 1,200 200

Significant restrictions: �

The nature and extent of significant restrictions on the Group’s ability to use oraccess assets and settle liabilities of subsidiaries with material non-controllinginterests are:

Cash and cash equivalents of $49,000 held in People’s Republic of China are subjectto local exchange control regulations. These regulations places restriction on theamount of currency being exported other than through dividends.

c. Summarised financial information about subsidiaries with material NCI �

Summarised financial information including goodwill on acquisition and consolidationadjustments but before intercompany eliminations of subsidiaries with material non-controlling interests are as follows:

Summarised balance sheets

XYZ China Co Ltd MSAX Sdn BhdAs at 31

December2015$’000

As at 31December

2014$’000

As at 31December

2015$’000

As at 31December

2014$’000

CurrentAssets 5,000 4,800 2,082 2,652Liabilities (3,022) (3,000) (582) (1,302)Net current assets 1,978 1,800 1,500 1,350

Non-currentAssets 522 830 886 720Liabilities (198) (366) (386) (120)Net non-current assets 324 464 500 600Net assets 2,302 2,264 2,000 1,950

FRS 112.12

FRS 112.B10.a

FRS 112.10.b.iFRS 112.13

FRS 112.12.gFRS 112.B10.6

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 98

17. Investment in subsidiaries ÊËÑÒ (continued)

c. Summarised financial information about subsidiary with material NCI �

Summarised statement of comprehensive income

XYZ China Co Ltd MSAX Sdn Bhd

2015$’000

2014$’000

2015$’000

2014$’000

Revenue 867 953 554 482

Profit before income tax 260 286 166 145

Income tax expense (44) (49) (28) (24)

Profit after tax – continuingoperations

216 237 138 121

Other comprehensive income 10 (8) 62 (71)

Total comprehensive income 226 229 200 50

Other summarised informationXYZ China Co Ltd MSAX Sdn Bhd

2015$’000

2014$’000

2015$’000

2014$’000

Net cash flows fromoperations 186 235 130 42

Acquisition of significantProperty, Plant andEquipment (68) (778) (229) (553)

Commentary:Ê An entity shall disclose information that enables users of its consolidated financial statements

(a) to understand:

i. the composition of the group; andii. the interest that non-controlling interests have in the group’s activities and cash flows;

and

(b) to evaluate:

i. the nature and extent of significant restrictions on its ability to access or use assets,and settle liabilities, of the group

ii. the nature of, and changes in, the risks associated with its interests in consolidatedstructured entities

iii. the consequences of changes in its ownership interest in a subsidiary that do not resultin a loss of control; and

iv. the consequences of losing control of a subsidiary during the reporting period.

FRS 112.10

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 99

17. Investment in subsidiaries ÊËÑÒ (continued)

Commentary (continued):Ë An entity shall decide, in the light of its circumstances, how much detail it provides to satisfy

the information needs of users, how much emphasis it places on different aspects of therequirements and how it aggregates the information. It is necessary to strike a balancebetween burdening financial statements with excessive detail that may not assist users offinancial statements and obscuring information as a result of too much aggregation.

Ì In this illustration, it is assumed that there was no reversal of impairment loss on investment insubsidiaries. Where applicable, an entity should disclose the events and circumstances that ledto the reversal of such impairment loss.

Í An entity shall disclose the country of incorporation if different from the principal place ofbusiness of the subsidiary.

Î An entity shall disclose the proportion of voting rights if different from the proportion ofownership interests held.

Ï An entity shall disclose:

(a) Significant restrictions (e.g. statutory, contractual and regulatory restrictions) on itsability to access or use the assets and settle the liabilities of the group, such as:

i. those that restrict the ability of a parent or its subsidiaries to transfer cash or otherassets to (or from) other entities within the group.

ii. guarantee or other requirements that may restrict dividends and other capitaldistributions being paid, or loans and advances being made or repaid, to (or from)other entities within the group.

(b) The nature and extent to which protective rights of non-controlling interests cansignificantly restrict the entity’s ability to access or use the assets and settle the liabilitiesof the group (such as when a parent is obliged to settle liabilities of a subsidiary beforesettling its own liabilities, or approval of non-controlling interests is required either toaccess the assets or to settle the liabilities of a subsidiary).

(c) The carrying amounts in the consolidated financial statements of the assets and liabilitiesto which those restrictions apply.

Ð The summarised financial information presented shall be the amounts before inter-companyeliminations.

FRS 112.B2

FRS 36.130.a

FRS 112.12.bFRS 27.17.b.ii

FRS 112.12.dFRS 27.17.b.iii

FRS 112.13

FRS 112.B11

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 100

17. Investment in subsidiaries ÊËÑÒ (continued)

Commentary (continued):

� Nature of the risks associated with an entity’s interests in consolidated structured entities

In this illustration, the Group does not consolidate any structured entity. If the Group providesfinancial support to consolidated structured entities, please refer to the following disclosurerequirements:

An entity shall disclose the terms of any contractual arrangements that could require theparent or its subsidiaries to provide financial support to a consolidated structured entity,including events or circumstances that could expose the reporting entity to a loss (e.g. liquidityarrangements or credit rating triggers associated with obligations to purchase assets of thestructured entity or provide financial support).

If during the reporting period a parent or any of its subsidiaries has, without having acontractual obligation to do so, provided financial or other support to a consolidated structuredentity (e.g. purchasing assets of or instruments issued by the structured entity), the entity shalldisclose:

(a) the type and amount of support provided, including situations in which the parents or itssubsidiaries assisted the structured entity in obtaining financial support; and

(b) the reasons for providing the support.

If during the reporting period a parent or any of its subsidiaries has, without having acontractual obligation to do so, provided financial or other support to a previouslyunconsolidated structured entity and that provision of support resulted in the entity controllingthe structured entity, the entity shall disclose an explanation of the relevant factors in reachingthat decision.

An entity shall disclose any current intentions to provide financial or other support to aconsolidated structured entity, including intentions to assist the structured entity in obtainingfinancial support.

� Investment entities

In this illustration, the Company does not meet the definition of an investment entity andtherefore does not apply the exception to consolidation under FRS 110. When a parentdetermines that it is an investment entity in accordance with FRS 110, the following disclosuresare required.

(a) Information about significant judgements and assumptions it has made in determining thatit is an investment entity. If the investment entity does not have one or more of the typicalcharacteristics of an investment entity, it shall disclose its reasons for concluding that it isnevertheless an investment entity.

(b) When an entity becomes, or ceases to be, an investment entity, it shall disclose the changeof investment entity status and the reasons for the change. In addition, an entity thatbecomes an investment entity shall disclose the effect of the change of status on thefinancial statements for the period presented including:

- The total fair value, as of the date of change of status, of the subsidiaries that cease tobe consolidated

- The total gain or loss, if any, calculated in accordance with paragraph B101 of FRS 110

- The line item(s) in profit or loss in which the gain or loss is recognised (if not presentedseparately)

FRS 112.14

FRS 112.15

FRS 112.16

FRS 112.17

FRS 112.9A

FRS 112.9B

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 101

17. Investment in subsidiaries ÊËÑÒ (continued)

Commentary (continued):� Investment entities (continued)

(c) For each unconsolidated subsidiary, an investment entity shall disclose:

- the subsidiary’s name;

- the principal place of business (and country of incorporation if different from theprincipal place of business) of the subsidiary; and

- the proportion of ownership interest held by the investment entity and, if different, theproportion of voting rights held.

(d) If an investment entity is the parent of another investment entity, the parent shall alsoprovide the disclosures in item (c) above for investments that are controlled by itsinvestment entity subsidiary. The disclosure may be provided by including, in the financialstatements of the parent, the financial statements of the subsidiary (subsidiaries) thatcontain the above information.

(e) The nature and extent of any significant restrictions (e.g. resulting from borrowingarrangements, regulatory requirements or contractual arrangements) on the ability of anunconsolidated subsidiary to transfer funds to the investment entity in the form of cashdividends or to repay loans and advances made to the unconsolidated subsidiary by theinvestment entity

(f) Any current commitments or intentions to provide financial or other support to anunconsolidated subsidiary, including commitments or intentions to assist the subsidiary inobtaining financial support.

(g) If, during the reporting period, an investment entity or any of its subsidiaries has, orwithout having a contractual obligation to do so, provided financial or other support to anunconsolidated subsidiary (e.g. purchasing assets of, or instruments issued by, thesubsidiary or assisting the subsidiary in obtaining financial support), the entity shalldisclose:

- The type and amount of support provided to each unconsolidated subsidiary

- The reasons for providing the support

(h) The terms of any contractual arrangements that could require the entity or itsunconsolidated, controlled, structured entity, including events or circumstances that couldexpose the reporting entity to a loss (e.g. liquidity arrangements or credit triggersassociated with obligations to purchase assets of the structured entity or to providefinancial support).

(i) If during the reporting period an investment entity or any of its unconsolidated subsidiarieshas, without having a contractual obligation to do so, provided financial or other supportto an unconsolidated, structured entity that the investment entity did not control, and ifthat provision of support resulted in the investment entity controlling the structuredentity, the investment entity shall disclose an explanation of the relevant factors inreaching the decision to provide that support.

FRS 112.19B

FRS 112.19C

FRS 112.19D.a

FRS 112.19D.b

FRS 112.19E

FRS 112.19F

FRS 112.19G

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 102

17. Investment in subsidiaries (continued)

d. Acquisition of subsidiary ÊËÊ��

On 18 October 2015 (the “acquisition date”), the Group’s subsidiary company, XYZTechnologies Pte Ltd (XYZ Technologies) acquired an additional 55% equity interestin its 25% owned associate, MSAX Sdn Bhd (“MSAX”), a manufacturer of electroniccomponents in Malaysia. Upon the acquisition, MSAX became a subsidiary of theGroup.

The Group has acquired MSAX in order to strengthen its position as a leadingmanufacturer of electronic components in the ASEAN region and to enlarge therange of products it can offer to its clients. The acqusition is also expected to reducecosts through economies of scale.

The Group has elected to measure the non-contolling interest at the non-controllinginterest’s proportionate share of MSAX’s net identifiable assets.

The fair value of the identifiable assets and liabilities of MSAX as at the acquisitiondate were:

Fair valuerecognised on

acquisition

$’000

Property, plant and equipment 1,269

Brand 500

Trade and other receivables 1,089

Inventories 752

Cash and cash equivalents 417

4,027

Trade and other payables (1,038)

Provision for maintenance warranties (50)

Deferred tax liability (48)

Income tax payable (100)

(1,236)

Total identifiable net assets at fair value 2,791Non-controlling interest measured at the non-controlling interest’s

proportionate share of MSAX’s net idenfiable assets Ì (558)

Goodwill arising from acquisition 772

3,005

Consideration transferred for the acquisition of MSAX

Cash paid 200Equity instruments issued (1,305,310 ordinary shares of XYZ Holdings

(Singapore) Limited) 1,475

Deferred cash settlement 200

Contingent consideration recognised as at acquisition date 450

Total consideration transferred 2,325Fair value of equity interest in MSAX held by the Group immediately

before the acquisition 680

3,005

FRS 103.B64.a-c

FRS 103.B64.d

FRS 103.B64.i

FRS 103.B64.o

FRS 103.B64.k

FRS 103.B64.f.i

FRS 103.B64.f.iv

FRS 103.B64.f.iii

FRS 103.B64.f.iii,

FRS 103.B64.g.iFRS 103.B64.f

FRS 103.B64.p.i

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 103

17. Investment in subsidiaries (continued)

d. Acquisition of subsidiary ÊËÊ�� (continued)

$’000

Effect of the acquisition of MSAX on cash flows

Total consideration for 55% equity interest acquired 2,325

Less: non-cash consideration (2,125)

Consideration settled in cash 200

Less: Cash and cash equivalents of subsidiay acquired (417)

Net cash inflow on acquisition 217

Equity instruments issued as part of consideration transferred

In connection with the acquisition of additional 55% equity interest in MSAX, XYZHoldings (Singapore) Limited issued 1,305,310 ordinary shares with a fair value of$1.13 each. The fair value of these shares is the published price of the shares at theacquisition date.

The attributable cost of the issuance of the shares as consideration of $50,000 havebeen recognised directly in equity as a deduction from share capital.

Contingent consideration arrangement

As part of the purchase agreement with the previous owner of MSAX, a contingentconsideration has been agreed. Additional cash payments shall be payable to theprevious owner of MSAX of:

a) $385,000, if the entity generates $1,000,000 profit before tax for a period of12 months after the acquisition date, or

b) $705,000 if the entity generates $1,500,000 profit before tax for a period of12 months after the acquisition date.

As at the acquisition date, the fair value of the contingent consideration wasestimated at $450,000.

As of 31 December 2015, the key performance indicators of MSAX show clearly thattarget (a) will be achieved and the achievement of target (b) is probable due to asignificant expansion of the business and synergies implemented. Accordingly, thefair value of the contingent consideration has been adjusted to reflect thisdevelopment and such change has been recognised through profit or loss.

The fair value of the contingent consideration as at 31 December 2015 has beenincreased by $235,000 to $685,000. The fair value of the contingent considerationwas calculated by applying the income approach using the probability-weightedpayout approach and at a discount rate of 8%. This fair value adjustment ofcontingent consideration is recognised in the “Other expenses” line item in theGroup’s profit or loss for the year ended 31 December 2015.

Transaction costs

Transaction costs related to the acquisition of $300,000 have been recognised in the“Administrative expenses” line item in the Group’s profit or loss for the year ended31 December 2015.

FRS 7.40.a

FRS 7.43

FRS 7.40.b

FRS 7.40.c

FRS 7.42

FRS 103.B64.f.iv

FRS 103.B64.l and m

FRS 103.B64.g.ii

FRS 103.B64.g.iii

FRS 103.B64.g.i

FRS 103.58FRS 103.B67.b

FRS 103.B64.l and m

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 104

17. Investment in subsidiaries (continued)

d. Acquisition of subsidiary ÊËÊ�� (continued)

Gain on remeasuring previously held equity interest in MSAX to fair value atacquisition date

The Group recognised a gain of $140,000 as a result of measuring at fair value its25% equity interest in MSAX held before the business combination. The gain isincluded in the “Other income” line item in the Group’s profit or loss for the yearended 31 December 2015.

Trade and other receivables acquired

Trade and other receivables acquired comprise of trade receivables and bills ofexchange and promissory notes with fair values of $600,000 and $489,000,respectively. Their gross amounts are $655,000 and $489,000, respectively. At theacquisition date, $55,000 of the contractual cash flows pertaining to tradereceivables are not expected to be collected. It is expected that the full contractualamount of the bills of exchange and promissory notes can be collected.

Goodwill arising from acquisition�

The goodwill of $772,000 comprises the value of strengthening the Group’s marketposition in the ASEAN region, improved resilience to sector specific volatilities, andcost reduction syngeries expected to arise from the acquisition. It also includes thevalue of a customer list, which has not been recognised separately. Goodwill isallocated entirely to the electronic components segment. Due to the contractualterms imposed on the acquisition, the customer list is not separable and thereforedoes not meet the criteria for recognition as an intangible asset under FRS 38. Noneof the goodwill recognised is expected to be deductible for income tax purposes.

Impact of the acquisition on profit or loss

From the acquisition date, MSAX has contributed $8,000,000 of revenue and$301,000 to the Group’s profit for the year. If the business combination had takenplace at the beginning of the year, the revenue from continuing operations wouldhave been $144,720,000 and the Group’s profit from continuing operations, net oftax would have been $5,801,000.

Provisional accounting of the acquisition of MSAX

A brand has been identified as an intangible asset arising from this acquisition. TheGroup has engaged an independent valuer to determine the fair value of the brand.As at 31 December 2015, the fair value of the brand amounting to $500,000 hasbeen determined on a provisional basis as the final results of the independentvaluation have not been received by the date the financial statements was authorisedfor issue. Goodwill arising from this acquisition, the carrying amount of the brand,deferred tax liability, and amortisation of the brand will be adjusted accordingly on aretrospective basis when the valuation of the brand is finalised.

FRS 103.B64.p.ii

FRS 103.B64.h

FRS 103.B64.e

FRS 103.B64.k

FRS 103.B64.q.i

FRS 103.B64.q.ii

FRS 103.B67.a

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 105

17. Investment in subsidiaries (continued)

e. Acquisition of ownership interest in subsidiary, without loss of control Í

On 31 March 2015, the Group’s subsidiary company, XYZ Technologies, acquired anadditional 20% equity interest in XYZ Vietnam Ltd (XYZ Vietnam) from its non-controlling interests for a cash consideration of $800,000. As a result of thisacquisition, XYZ Vietnam became a wholly-owned subsidiary of XYZ Technologies.The carrying value of the net assets of XYZ Vietnam at 31 March 2015 was$3,250,000 and the carrying value of the additional interest acquired was$650,000. The difference of $150,000 between the consideration and the carryingvalue of the additonal interest acquired has been recognised as “Premium paid onacquisition of non-controlling interests“ within equity.

The following summarises the effect of the change in the Group’s ownership interestin XYZ Vietnam on the equity attributable to owners of the Company:

$’000

Consideration paid for acqusition of non-controlling interests 800

Decrease in equity attributable to non-controlling interests (650)

Decrease in equity attributable to owners of the Company 150

Commentary:

Acquisition of subsidiary

Ê An entity shall also make disclosures of business combinations in accordance to FRS 103.B64even if they were effected after the end of the reporting date but before the financialstatements are authorised for issue, unless the initial accounting for the businesscombination is incomplete at the time the financial statements are authorised for issue. Inthat situation, the entity shall describe which disclosures cannot be made and the reasonswhy they cannot be made.

� For individually immaterial business combinations occurring during the reporting period thatare material collectively, an entity shall disclose in aggregate the information required by FRS103.B64.e-q.

� If the acquisition results in a bargain purchase instead of goodwill recognised, the acquirershall disclose the amount of the gain recognised and the line item in the consolidatedstatement of comprehensive income in which the gain is recognised, and a description of thereasons why the transaction resulted in a gain.

FRS 112.18

FRS 103.59.b andB66

FRS 103.B65

FRS 103.B64.n

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 106

17. Investment in subsidiaries (continued)

Additional illustrative disclosures:

Acquisition of subsidiary

� An acquirer shall also disclose information that enables users of its financial statements toevaluate the financial effects of adjustments recognised in the current reporting period thatrelate to business combinations that occurred in the current period or previous reportingperiods.

Illustrative disclosure for adjustments to initial accounting for a business combination thatwas determined provisionally in the previous reporting period:

The purchase price allocation of the acquisition of Acquiree Group (Acquiree) in thefinancial year ended 31 December 2015 were provisional as the Group had sought anindependent valuation for the land and buildings owned by Acquiree. The results of thisvaluation had not been received at the date the 2015 financial statements wereauthorised for issue. The valuation of the land and buildings was received in April 2015and showed that the fair value at the date of acquisition was $XXX, an increase of $XXXcompared to the provisional value.

The 2014 comparative information has been restated to reflect this adjustment. Thevalue of the land and buildings increased by $XXX, there was an increase in the deferredtax liability of $XXX and an increase in non-controlling interest of $XXX. There was also acorresponding reduction in goodwill of $XXX, to give total goodwill arising on theacquisition of $XXX. The depreciation charge on the buildings from the acquisition dateto 31 December 2014 increased by $XXX.

� In this illustration, no contingent liabilities are recognised in the business combination.

Illustrative note disclosure where an entity recognised contingent liabilities in a businesscombination:

A contingent liability at a fair value of $XXX has been determined at the acquisition dateresulting from a claim for payment by a supplier whose shipment has been rejected andpayment has been refused by the Group due to deviations from the defined technicalspecifications of the goods. The claim is subject to legal arbitration and is only expectedto be finalised in late 2015. As at the reporting date, the contingent liability has beenreassessed and is determined to be $XXX, which is based on the expected probableoutcome (see Note X on Contingent Liability). The charge has been recognised in profit orloss.

FRS 103.61 andB67

FRS 103.B67.a

FRS 103.B64.j

FRS 103.56

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 107

17. Investment in subsidiaries (continued)

Additional illustrative disclosures (continued):

� Please refer to commentary no. 4 of Note 2.4 Basis of consolidation and businesscombinations.

In this illustration, the Group has elected to measure non-controlling interest arising fromacquisition of MSAX at the non-controlling interest’s proportionate share of MSAX’sidentifiable net assets. The following is an illustrative disclosure when an entity chooses tomeasure non-controlling interest arising in a business combination at fair value:

Fair value of non-controlling interest in Acquiree

The fair value of the non-controlling interest in Acquiree, an unlisted company, wasestimated by applying the income approach that is corroborated by market approach. Thefair value estimates are based on:

- A discount rate range of XX% to XX%;

- Terminal value, calculated based on the long term sustainable growth rate for theindustry ranging from XX% to XX%, which has been used to determine income for thefuture years; and

- Adjustments because of the lack of control and marketability that market participantswould consider when estimating the fair value of the non-controlling interest inAcquiree.

� Disposal of ownership in interest in subsidiary, without loss of control

In this illustration, the Group does not dispose any ownership in interest in subsidiary, withoutloss of control. The following provides illustrative disclosures if the Group disposes itsownership of interest in subsidiary without loss of control.

On 13 June 2015, the Group disposed of a 5% equity interest in XYZ China Co. Ltd.Following the disposal, the Group still controls XYZ China Co. Ltd., retaining 70% of theownership interests. The transaction has been accounted for as an equity transaction withnon-controlling interests, resulting in:

2015

$’000Proceeds from sale of 5% ownership interest XXX

Net assets attributable to NCI (XXX)

Increase in equity attributable to parent XXX

Represented by:

Decrease in foreign currency translation reserve (XXX)

Decrease in asset revaluation reserve (XXX)

Other reserves XXX

Increase in equity attributable to parent entity XXX

FRS 103.B64.o.ii

FRS 112.10.b.iii

FRS 112.18

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 108

17. Investment in subsidiaries (continued)

Additional illustrative disclosures (continued):

� Loss of control in subsidiary

In this illustration, there is no loss of control in subsidiary. Illustrative disclosures when theGroup losses control in its subsidiary

On 27 February 2015, the Group entered into a sale agreement to dispose of 85% of itsinterest in its wholly-owned subsidiary, Sun Pte Ltd., at its carrying value. The disposalconsideration was fully settled in cash. The disposal was completed on 30 April 2014, onwhich date control of Sun Pte Ltd. passed to the acquirer.

The value of assets and liabilities of Sun Pte Ltd. recorded in the consolidated financialstatements as at 27 February 2015, and the effects of the disposal were:

Gain on disposal:

The gain or loss on disposal attributable to measuring the retained interest amounted to$XXX was included in other income in profit or loss.

2015

$’000Property, plant and equipment XXXTrade and other receivables XXXInventories XXXCash and short-term deposits XXX

XXXTrade and other payables (XXX)Income tax payable (XXX)Carrying value of net assets (XXX)

Cash consideration XXXCash and cash equivalents of the subsidiary (XXX)Net cash inflow on disposal of a subsidiary XXX

2015$’000

Cash received XXXNet assets derecognised (XXX)Fair value of retained interest XXXCumulative exchange differences in respect of the net

assets of the subsidiary reclassified from equity onloss of control of subsidiary XXX

Gain on disposal XXX

FRS 112.10.b.iv

FRS 7.40.d

FRS 112.19

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 109

18. Investment in joint venture ÊËÌÍÎ

The Group has 50% (2014: 50%) interest in the ownership and voting rights Ï in a jointventure, XYZ-ABC JV Co. Ltd that is held through a subsidiary. This joint venture isincorporated in People’s Republic of China Ð and is a strategic venture in the business orproperty investment. The Group jointly controls the venture with other partner under thecontractual agreement and requires unanimous consent for all major decisions over therelevant activities.

Summarised financial information in respect of XYZ-ABC JV Co. Ltd. based on its FRSfinancial statements, and reconciliation with the carrying amount of the investment in theconsolidated financial statements are as follows: Ñ

Summarised balance sheet

Group

2015 2014

$’000 $’000

Cash and cash equivalents 176 132

Trade receivables 542 808

Current assets 718 940

Non-current assets excluding goodwill 3,220 2,898

Goodwill 100 100

Non-current assets 3,320 2,998

Total assets 4,038 3,938

Current liabilities (200) (412)

Non-current liabilities (excluding trade, other payables andprovisions) (490) (480)

Other non-current liabilities (100) (100)

Total non-current liabilities (590) (580)

Total liabilities (790) (992)

Net assets 3,248 2,946

Net assets excluding goodwill 3,148 2,846

Proportion of the Group’s ownership 50% 50%

Group’s share of net assets 1,574 1,423

Goodwill on acquisition 100 100

Carrying amount of the investment 1,674 1,523

FRS 112.21FRS 27.17.b

FRS 112.21.b.iiFRS 112.B12FRS 112.B13

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 110

18. Investment in joint venture (continued) ÊËÌÍÎ

Summarised statement of comprehensive income

Group

2015$’000

2014$’000

Revenue 428 398Operating expenses (106) (130)Interest expense (10) (12)Profit before tax 302 256Income tax expense - -Profit after tax 302 256Other comprehensive income - -Total comprehensive income 302 256

Dividneds of $60,000 (2014: $50,000) were received from XYZ-ABC JV Co.Ltd. XYZ-ABC JV Co. Ltd is restricted by regulatory requirements by paying dividends greater than50% of the annual profit. Ò

Commentary:

Ê In this illustration, the Group does not have investment in joint operation.

The following disclosures are required for investments in joint operations:

(a) the name of the joint operation(b) the nature of the entity’s relationship with the joint operations, (by, for example,

describing the nature of the activities of the joint operation and whether it is strategic tothe entity’s activities)

Other disclosures required for joint ventures are not applicable for joint operations.

Ë For interests in joint arrangements, an entity shall disclose information that enables users ofits financial statements to evaluate:

(a) the nature, extent and financial effects of its interests in joint arrangements, includingthe nature and effects of its contractual relationship with the other investors with jointcontrol of joint arrangements; and

(b) the nature of, and changes in, the risks associated with its interests in joint ventures.

Ì If the joint venture is accounted for using the equity method, the entity shall disclose the fairvalue of its investment in the joint venture or associate, if there is a quoted market price forthe investment.

Í In this illustration, the Group have only one investment in joint venture which is material.

The following disclosures are required, in aggregate for all individually immaterial jointventures:

(a) the carrying amount of its interests(b) its share of the joint ventures’

i. profit or loss from continuing operations

ii. post-tax profit or loss from discontinued operations

iii. other comprehensive income

FRS 112.B12.a

FRS 112.22.a

FRS 112.21.a

FRS 112.20

FRS 112.21.b.iii

FRS 112.B16

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 111

18. Investment in joint venture (continued) ÊËÌÏÐ

Commentary (continued):

Î In this illustration, the Group does not have any unrecognised share of losses of itsinvestment in joint venture.

If the Group have stopped recognising its share of losses of its joint venture when applyingthe equity method, it shall disclose the unrecognised share of losses of the joint venture,both for the reporting period and cumulatively.

Ï An entity shall disclose the proportion of voting rights held for each joint arrangement ifdifferent from the proportion of ownership interests held.

Ð An entity shall disclose the principal place of business for each joint arrangement if differentfrom the country of incorporation of the joint arrangement.

Ñ An entity may present the summarised financial information on the basis of the jointventure’s financial statements if:

(a) the entity measures its interest in the joint venture at fair value; and

(b) the joint venture does not prepare FRS financial statements and preparation on thatbasis would be impracticable or cause undue cost.

In that case, the entity shall disclose the basis on which the summarised financial informationhas been prepared.

In this illustration, the joint venture does not have depreciation and amortisation and interestincome. For each material joint venture, an entity shall disclose the following information:

(a) cash and cash equivalents

(b) current financial liabilities (excluding trade and other payables and provisions)

(c) non-financial liabilities (excluding trade and other payables and provisions)

(d) depreciation and amortisation

(e) interest income

(f) interest expense

(g) income tax expense or income

Ò An entity shall also disclose the nature and extent of any significant restrictions (e.g.resulting from borrowing arrangements, regulatory requirements or contractualarrangements between investors with joint control of a joint venture) on the ability of jointventures to transfer funds to the entity in the form of cash dividends, or to repay loans andadvances.

FRS 112.22.c

FRS 112.21.a.iv

FRS 112.21.a.iii

FRS 112.B15

FRS 112.B13

FRS 112.22.a

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 112

19. Investment in associates Ê

The Group’s material investments in associates are summarised below:

i Audited by Ernst & Young LLP, Singaporeii Audited by member firm of EY Global in Malaysia

*The Group holds 80% of ownership interest in MSAX Sdn Bhd in 2014 and accounts for it as a subsidiary(Note X).

The activities of the associates are strategic to the Group activities. The Group has notrecognised losses relating to Heart Land Ltd where its share of losses exceeds the Group’sinterest in this associate. The Group’s cumulative share of unrecognised losses at the endof the reporting period was $50,000 (2014: $35,000), of which $15,000 (2014: $5,000)was the share of the current year’s losses. The Group has no obligation in respect ofthese losses. �

The Group has not recognised its share of the current year profit of $8,000 (2014: nil)relating to Drill Pte Ltd as the Group’s cumulative share of unrecognised losses withrespect to that associate was $17,000 (2014: $25,000) at the end of the reportingperiod. �

Dividends of $40,000 (2014: $30,000) and $60,000 (2014: $50,000) were receivedfrom QSpeed Pte Ltd and HKI Pte Ltd respectively. QSpeed Pte Ltd. is restricted byregulatory requirements by paying dividends greater than 60% of the annual profit. �

2015 2014

$’000 $’000QSpeed Pte Ltd 4,560 4,465

HKI Pte Ltd 5,576 5,420

Other associates 459 436

10,595 10,321

Fair value of investment in an associate for which there is apublished price quotation� 10,600 10,400

NameCountry of

incorporation� Principal activitiesProportion (%) of

ownership interest�

2015 2014Held through subsidiaries:

QSpeed Pte Ltd i Singapore Manufacture ofelectroniccomponents

35 35

MSAX Sdn Bhd ii Malaysia Manufacture ofelectroniccomponents

–* 25

Heart Land Ltd i Singapore Investment properties 45 45

HKI Pte Ltd i Singapore Investment properties 47 47

Drill Pte Ltd Singapore Investment properties 22 22

FRS 112.21.a.i

FRS 112.B16

FRS 112.21.b.iii

FRS 112.21FRS 27.17.b

SGX 717

FRS 112.21.a.iiFRS 112.22.c

FRS 112.B12.a

FRS 112.22.a

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 113

19. Investment in associates (continued) Ê

Aggregate information about the Group’s investments in associates that are notindividually material are as follows:�

The summarised financial information in respect of QSpeed Pte Ltd and HKI Pte Ltd,based on its FRS financial statements and a reconciliation with the carrying amount ofthe investment in the consolidated financial statements are as follows:�

Summarised balance sheet

Summarised statement of comprehensive income

2015 2014

$’000 $’000

Profit or loss after tax from continuing operations 1,237 555

Other comprehensive income 223 174

Total comprehensive income 1,460 729

QSpeed Pte Ltd HKI Pte LtdAs at

December2015

As atDecember

2014

As atDecember

2015

As atDecember

2014

$’000 $’000 $’000 $’000Current assets 8,040 8,318 6,987 6,510

Non-current assets excludinggoodwill 8,728 8,510 12,390 10,870

Goodwill 550 550 315 315

Total assets 17,318 17,378 19,692 17,695

Current liabilities (1,388) (1,211) (2,433) (1,788)

Non- current liabilities (4,494) (5,146) (6,229) (5,188)

Total liabilities (5,882) (6,357) (8,662) (6,976)

Net assets 11,436 11,021 11,030 10,719

Net assets excluding goodwill 10,886 10,471 10,715 10,404

Proportion of the Group’sownership 35% 35% 47% 47%

Group’s share of net assets 3,810 3,665 5,036 4,890

Goodwill on acquisition 550 550 315 315

Other adjustments 200 250 225 215

Carrying amount of theinvestment 4,560 4,465 5,576 5,420

QSpeed Pte Ltd HKI Pte Ltd

2015 2014 2015 2014

$’000 $’000 $’000 $’000

Revenue 20,269 18,467 25,202 23,850

Profit after tax from continuingoperations (47) (22) 6 (22)

Other comprehensive income 5 8 2 (3)

Total comprehensive income (42) (14) 8 (25)

FRS 112.21.c.iiFRS 112.B16

FRS 112.21.b.iFRS 112.B12FRS 112.B14

FRS 112.B14.b

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 114

19. Investment in associates (continued) Ê

Commentary:

Investment in associates

Ê For interests in associates, an entity shall disclose information that enables users of itsfinancial statements to evaluate:

(a) the nature, extent and financial effects of its interests in associates, including the natureand effects of its contractual relationship with the other investors with significantinfluence over associates; and

(b) the nature of, and changes in, the risks associated with its interests in associates.

Ë If the associate is accounted for using the equity method, the entity shall disclose the fairvalue of its investment in the associate, if there is a quoted market price for the investment.

Ì An entity shall disclose the principal place of business for each associate if different from thecountry of incorporation of the associate.

Í An entity shall disclose the proportion of voting rights held for each associate if different fromthe proportion of ownership interests held.

Î If the Group have stopped recognising its share of losses of its associate when applying theequity method, it shall disclose the unrecognised share of losses of the associate, both for thereporting period and cumulatively.

Ï An entity shall also disclose the nature and extent of any significant restrictions (e.g. resultingfrom borrowing arrangements, regulatory requirements or contractual arrangementsbetween investors with significant influence over an associate) on the ability of associates totransfer funds to the entity in the form of cash dividends, or to repay loans and advances.

Ð In this illustration, the Group does not have any immaterial associate that is classified asdiscontinued operation.

The following disclosures are required, in aggregate for all individually immaterial associates:

(a) the carrying amount of its interests

(b) its share of the associates’

i. profit or loss from continuing operations

ii. post-tax profit or loss from discontinued operations

iii. other comprehensive income

iv. total comprehensive income

These disclosures above shall be disclosed separately for associates.

Ñ An entity may present the summarised financial information on the basis of the associate’sfinancial statements if:

(a) the entity measures its interest in the associate at fair value

(b) the associate does not prepare FRS financial statements and preparation on that basiswould be impracticable or cause undue cost.

In that case, the entity shall disclose the basis on which the summarised financial informationhas been prepared.

FRS 112.20

FRS 112.21.b.iii

FRS 112.21.a.iii

FRS 112.21.a.iv

FRS 112.22.c

FRS 112.22.a

FRS 112.B16

FRS 112.B15

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 115

20. Deferred tax

Deferred tax as at 31 December relates to the following:

Group Company

Consolidated balancesheet

Consolidatedincome

statement Ê Balance sheet

2015

$’000

2014

$’000

2015

$’000

2014

$’000

2015

$’000

2014

$’000

Deferred tax liabilities:Differences in depreciation for tax

purposes (601) (633) 146 251 (217) (218)Differences in amortisation of

intangible assets (62) (111) (47) (20) – –

Impairment of intangible assets (60) – 60 – – –

Revaluations to fair value:- Freehold land and buildings (1,159) (903) – – – –

- Available-for-sale financialassets (150) (94) – – – –

Fair value adjustments onacquisition of subsidiary (48) – – – – –

Convertible redeemablepreference shares (9) (13) (4) (3) (9) (13)

Undistributed earnings ofassociates (176) (145) 31 20 – –

Other items (8) (5) 3 3 – –

(2,273) (1,904) (226) (231)

Deferred tax assets:

Provisions 419 427 8 (5) – –

Unutilised tax losses 23 19 (4) (1) 9 8

Other items 28 17 (8) 7 12 18

470 463 21 26

Deferred tax expense 185 252

FRS 12.81.g.i and ii

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 116

20. Deferred tax (continued)

Unrecognised tax losses

At the end of the reporting period, the Group has tax losses of approximately $867,000(2014: $682,000) that are available for offset against future taxable profits of thecompanies in which the losses arose, for which no deferred tax asset is recognised due touncertainty of its recoverability. The use of these tax losses is subject to the agreement ofthe tax authorities and compliance with certain provisions of the tax legislation of therespective countries in which the companies operate. The tax losses have no expiry dateexcept for an amount of $101,000 (2014:$101,000) which will expire in 2015.

Unrecognised temporary differences relating to investments in subsidiaries and jointventure

At the end of the reporting period, no deferred tax liability (2014: nil) has beenrecognised for taxes that would be payable on the undistributed earnings of certain of theGroup’s subsidiaries and joint venture as:

- The Group has determined that undistributed earnings of its subsidiaries will not bedistributed in the foreseeable future; and

- The joint venture of the Group cannot distribute its earnings until it obtains theconsent of both the venturers. At the end of the reporting period, the Group does notforesee giving such consent.

Such temporary differences for which no deferred tax liability has been recognisedaggregate to $450,000 (2014: $340,000). The deferred tax liability is estimated to be$81,000 (2014: $68,000).

Tax consequences of proposed dividends

There are no income tax consequences (2014: nil) attached to the dividends to theshareholders proposed by the Company but not recognised as a liability in the financialstatements (Note 43).

Commentary:

Deferred tax income or expense recognised in profit or loss

Ê This disclosure is required in situations where the amount of the deferred tax income orexpense recognised in profit or loss relating to each type of deferred tax assets/liabilities isnot apparent from the changes in the amounts recognised in the balance sheet.

FRS 12.81.e

FRS 12.81.f

FRS 12.87

FRS 12.81.i

FRS 12.81.g.ii

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 117

21. Trade and other receivables ÊËÌ

Group Company

2015

$’000

2014

$’000

2015

$’000

2014

$’000

Trade and other receivables (current):

Trade receivables 21,694 24,191 – –

Bills of exchange and promissory notes 540 507 – –

Amounts due from related companies 361 – 288 300

Staff loans 155 150 50 50

Refundable deposits 102 119 – –

22,852 24,967 338 350

Other receivables (non-current):

Amounts due from subsidiaries – – 3,409 2,061

SGD loans to subsidiaries – – 10,563 12,574

SGD loans to associates 1,230 1,230 1,230 1,230

SGD loan to a fellow subsidiary 1,500 1,500 1,500 1,500

Staff loans 63 48 51 36

2,793 2,778 16,753 17,401Total trade and other receivables (current and

non-current) 25,645 27,745 17,091 17,751

Add: Cash and short-term deposits (Note 27) 6,117 4,858 4,621 4,145

Less: Sales tax receivables (15) (13) (3) (2)

Total loans and receivables Í 31,747 32,590 21,709 21,894

Trade receivables

Trade receivables are non-interest bearing and are generally on 30 to 90 days’ terms.They are recognised at their original invoice amounts which represent their fair values oninitial recognition.

At the end of the reporting period, trade receivables arising from export sales amountingto $1,560,000 (2014: $1,750,000) are arranged to be settled via letters of credit issuedby reputable banks in countries where the customers are based. Trade receivables fromfirst-time customers that are insured by trade credit insurance underwritten by areputable insurer in Singapore amount to $520,000 (2014: nil) at the end of thereporting period.

Trade receivables denominated in foreign currencies at 31 December are as follows:

Group Company

2015

$’000

2014

$’000

2015

$’000

2014

$’000

United States Dollar 4,128 4,525 – –

Renminbi 1,567 2,015 – –

Bills of exchange and promissory notes

These receivables bear interest at market rates and have an average maturity of 30 days(2014: 20 days) from the end of the reporting period.

FRS 1.77-78.bFRS 107.7 and31

FRS 24.18.b

FRS 24.18.b

FRS 24.18.b

FRS 24.18.b

FRS 24.18.b

FRS 107.8.c

FRS 107.7 and31

FRS 107.36.b

FRS 107.34.a

FRS 107.7 and31

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Notes to the financial statementsFor the financial year ended 31 December 2015

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21. Trade and other receivables ÊËÌ (continued)

Related party balances and staff loans

- Amounts due from related companies are non-trade related, unsecured, non-interestbearing, repayable upon demand and are to be settled in cash.

- Amounts due from subsidiaries and loans to subsidiaries are unsecured, non-interestbearing and are to be settled in cash. The former are not expected to be repaid withinthe next 12 months while the latter are due on 30 June 2018.

- Loans to associates bear interest at SIBOR + 2% p.a. (2014: SIBOR + 2% p.a.), have anaverage maturity of 1.5 years (2014: 2.5 years), secured by corporate guaranteesissued by their respective holding companies and are to be settled in cash.

- Loan to a fellow subsidiary is unsecured, bears interest at SIBOR + 2% p.a. (2014:SIBOR + 2% p.a.), repayable on 30 September 2017 and is to be settled in cash.

- Staff loans are unsecured and non-interest bearing. Non-current amounts have anaverage maturity of 1.5 years (2014: 1.5 years). The loans are recognised initially atfair value. The difference between the fair value and the absolute loan amountrepresents payment for services to be rendered during the period of the loan and isrecorded as part of prepaid operating expenses.

Receivables that are past due but not impaired

The Group has trade receivables amounting to $5,760,000 (2014: $6,852,000) that arepast due at the end of the reporting period but not impaired. These receivables areunsecured and the analysis of their aging at the end of the reporting period is as follows:

Group

2015

$’000

2014

$’000

Trade receivables past due but not impaired: Î

Lesser than 30 days 4,105 5,234

30 - 60 days 568 832

61- 90 days 822 524

91-120 days 245 262

More than 120 days 20 –

5,760 6,852

FRS 107.7,31and 36.bFRS 24.18.b

FRS 107.37.aFRS 107.36.bFRS 107.IG28

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Notes to the financial statementsFor the financial year ended 31 December 2015

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21. Trade and other receivables ÊËÌ (continued)

Receivables that are impaired

The Group’s trade receivables that are impaired at the end of the reporting period and themovement of the allowance accounts Ï used to record the impairment are as follows:

Group

Collectively impaired Individually impaired

2015

$’000

2014

$’000

2015

$’000

2014

$’000

Trade receivables – nominal amounts 1,220 1,350 150 80

Less: Allowance for impairment (350) (410) (100) (50)

870 940 50 30

Movement in allowance accounts:

At 1 January 410 510 50 60

Charge for the year 85 95 50 20

Written off (130) (205) – (30)

Exchange differences (15) 10 – –

At 31 December 350 410 100 50

Trade receivables that are individually determined to be impaired at the end of thereporting period relate to debtors that are in significant financial difficulties and havedefaulted on payments. These receivables are not secured by any collateral or creditenhancements.

Receivables that are impaired

At the end of the reporting period, the Group and the Company have provided anallowance of $100,000 (2014: $100,000) for impairment of the unsecured loan to afellow subsidiary company with a nominal amount of $1,600,000 (2014: $1,600,000).This related party has been suffering significant financial losses for the current and pasttwo financial years.

There has been no movement in this allowance account for the financial year ended 31December 2015 (2014: charge of $100,000 for impairment loss).

FRS 107 IG29.a

FRS 107.37.b

FRS 107.IG29.b

FRS 107.16

FRS 107.37.bFRS 107.36.b

FRS 107.37.bFRS 107.36.bFRS 24.18.c

FRS 107.16 and 6FRS 24.18.d

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21. Trade and other receivables ÊËÌ (continued)

Receivables subject to offsetting arrangements Ð

The Group regularly purchases electronic raw materials from and sell electronic productsto MNO Pte Ltd. Both parties have an arrangement to settle the net amount due to orfrom each other on a 30-days term basis.

The Group’s trade receivables and trade payables that are off-set are as follows:

31 December 2015$‘000

Gross carryingamounts

Gross amountsoffset in the

balance sheet

Net amounts in thebalance sheet

DescriptionTrade receivables 6,100 (2,540) 3,560Trade payables - (2,540) -

31 December 2014$‘000

DescriptionTrade receivables 5,450 (1,730) 3,720Trade payables - (1,730) -

Receivables subject to an enforceable master netting arrangement that are not otherwiseset-off Ð

The Group regularly purchases electronic raw materials from and sell electronic productsto PQR Pte Ltd. Both parties do not have an arrangement to settle the amount due to orfrom each other on a net basis but have the right to set off in the case of default andinsolvency or bankruptcy.

The Group’s trade receivables and trade payables subject to an enforceable masternetting arrangement that are not otherwise set-off are as follows:

31 December 2015$‘000

Gross carryingamounts

Related amountsnot set off in the

balance sheet

Net amount

DescriptionTrade receivables 3,560 (1,493) 2,067Trade payables 1,493 (1,493) -

31 December 2014$‘000

DescriptionTrade receivables 4,230 (1,699) 2,531Trade payables 1,699 (1,699) -

FRS 107.13C.aFRS 107.13C.bFRS 107.13C.c

FRS 107.13E

FRS 107.13C.d.iFRS 107.13C.e

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21. Trade and other receivables ÊËÌ (continued)

Commentary:

Collateral and other credit enhancements

Ê When an entity holds collateral (of financial or non-financial assets) and is permitted to sell orrepledge the collateral in the absence of default by the owner of the collateral, it shall disclose:(a) the fair value of the collateral held; (b) the fair value of any such collateral sold orrepledged, and whether the entity has an obligation to return it; and (c) the terms andconditions associated with its use of the collateral.

� When an entity obtains financial or non-financial assets during the period by taking possessionof collateral it holds as security or calling on other credit enhancements (e.g., guarantees), andsuch assets meet the recognition criteria under FRS, an entity shall disclose for such assetsheld at the reporting date:

(a) the nature and carrying amount of the assets; and

(b) when the assets are not readily convertible into cash, its policies for disposing of suchassets or for using them in its operations.

The above disclosure required for financial assets obtained by taking possession of collateral orother credit enhancements are only applicable to assets still held at the reporting date.

Ì An entity shall disclose a description of collateral held as security and of other creditenhancements, and their financial effect (e.g. a quantification of the extent to which collateralor other credit enhancements mitigate credit risk) in respect of the amount that bestrepresents the maximum exposure to credit risk.

Categories of financial assets and financial liabilities

Í Please refer to commentary no. 1 of Note 22 Investment securities.

Ageing analysis of financial assets that are past due but not impaired

Î FRS 107 requires the disclosure of an analysis by class of the age of financial assets that arepast due but not impaired. Any entity uses its judgement to determine the appropriate timebands to be disclosed.

Allowance account for credit losses

Ï FRS 107 requires disclosure requirements where financial assets are impaired by credit lossesand the entity records the impairment in a separate account (e.g., an allowance account usedto record individual impairments or a similar account used to record a collective impairment ofassets) rather than directly reducing the carrying amount of the asset. In such circumstances,the entity shall disclose a reconciliation of changes in that account (the “reconciliation”) duringthe period for each class of financial assets.

In this illustration, the entity has presented the reconciliation of changes in the two allowanceaccounts that it has used to record impairment of trade receivables, i.e., trade receivables thatare collectively impaired and those that are individually impaired.

FRS 107.15

FRS 107.38

FRS 107.36.b

FRS 107.37.a and IG28

FRS 107.16

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Notes to the financial statementsFor the financial year ended 31 December 2015

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21. Trade and other receivables ÊËÌ (continued)

Commentary (continued):

FRS 107 Disclosures - Offsetting financial assets and financial liabilities

Ð FRS 107 requires an entity to disclose information to enable users of its financial statements toevaluate the effect or potential effect of netting arrangements on the entity’s financial positionwhich includes the effect or potential effect of rights of set-off associated with the entity’srecognised financial assets and recognised financial liabilities that are within the scope ofparagraph 13A of FRS 107.

These disclosures are required for all recognised financial instruments that are set off inaccordance with paragraph 42 of FRS 32 and also apply to recognised financial instrumentsthat are subject to an enforceable master netting arrangement or similar agreementirrespective of whether they are set off in accordance with paragraph 42 of FRS 32.

To meet the objective above, an entity shall disclose, at the end of the reporting period, thefollowing quantitative information separately for recognised financial assets and recognisedfinancial liabilities that are within the scope of paragraph 13A of FRS 107:

(a) the gross amounts of those recognised financial assets and recognised financial liabilities;

(b) the amounts that are set off in accordance with the criteria in FRS 32.42 whendetermining the net amounts presented in the balance sheet;

(c) the net amounts presented in the balance sheet;

(d) the amounts subject to an enforceable master netting arrangement or similararrangement that are not otherwise include in (b), including Ñ

i. amounts related to recognised financial instruments that do not meet some or all ofthe offsetting criteria of FRS 32.42; and

ii. amounts related to financial collateral (including cash collateral); and

(e) the net amounts after deducting the amounts in (d) from the amounts in (c) above.

The information above shall be presented in a tabular format, separately for financial assetsand financial liabilities, unless another format is more appropriate.

Ñ The total amount disclosed for an instrument in accordance with (d) above shall be limited tothe net amounts presented in the balance sheet for that instrument.

FRS 107.13B

FRS 107.13A

FRS 107.13C

FRS 107.13D

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22. Investment securities

Group

2015

$’000

2014

$’000

Current:

Held for trading investments Ê

- Equity securities (quoted) 1,512 1,260

Non-current:

Available-for-sale financial assets Ê

- Other debt securities (unquoted) 1,563 980

- Equity securities (quoted) 1,746 848

- Equity securities (unquoted) 139 28

- Equity securities (unquoted), at cost� 500 600

3,948 2,456

Held-to-maturity investment Ê

- 3% p.a. SGD government bonds due 31 March 2017 (quoted) Ë 660 650

4,608 3,106

Investments pledged as security

The Group’s investment in government bonds amounting to $660,000 (2014:$650,000)has been pledged as security for a bank loan (Note 30). Under the terms and conditions ofthe loan, the Group is prohibited from disposing of this investment or subjecting it tofurther charges without furnishing a replacement security of similar value.

Impairment losses

During the financial year, the Group recognised the following impairment losses:

· Impairment loss of $70,000 (2014: $150,000) and $11,000 (2014: $35,000) forquoted and unquoted equity securities respectively as there were “significant” or“prolonged” decline in the fair value of these investments below their costs. The Grouptreats “significant” generally as X% and “prolonged” as greater than X months. �

· Impairment loss of $100,000 (2014: nil) pertaining to unquoted equity securitiescarried at cost, reflecting the write-down in the carrying value of this private equityinvestment in a Singapore company that was placed under receivership.

· Impairment loss of $17,000 (2014: $25,000) for unquoted other debt securities aftertaking into considerations the probability of default or significant delay in repaymentsby the debtors.

Commentary:

Categories of financial assets and financial liabilities

Ê FRS 107 required disclosure of the carrying amounts of financial instruments under each ofthe classification in FRS 39, either on the face of the balance sheet or in the notes. Thecategories of financial instruments include financial assets and financial liabilities that areclassified as held for trading, those that are designated upon initial recognition as financialassets or financial liabilities at fair value through profit or loss, held-to-maturity investments,loans and receivables, available-for-sale financial assets, and financial liabilities measured atamortised cost. In this illustration, the disclosure requirement is met in the respective notes tothe financial statements (refer to this note, Note 21, 26 and 31). Alternatively, the disclosureof the carrying amounts of financial instruments under each of the classifications in FRS 39may be presented in a separate centralised note.

FRS 107.7 and 31

FRS 107.8.a.ii

FRS 107.8.d

FRS 107.31

FRS 107.8.b

FRS 107.14

FRS 107.20.e and 37.b

FRS 107.8

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22. Investment securities (continued)

Commentary (continued):Nature and extent of risks arising from financial instruments

� Information such as the interest rates and maturity dates of the debt securities, and countrieswhere the equity securities are listed should be disclosed if material and enables the users ofthe financial statements to evaluate the nature and extent of the risks arising from financialinstruments to which the entity is exposed to at the reporting date. In this illustration, thecountries where the equity securities are listed are disclosed in Note 40 (e) Market price risk.

Determination of “significant” or “prolonged” decline in fair value of financial instruments

� Please refer to commentary no. 3 of Note 2.16 (c) Impairment of available-for-sale financialassets.

Additional illustrative disclosures:

Reclassification of financial assets at cost or amortised cost to fair value

� If an entity has reclassified any financial asset measured at cost or amortised cost to fair valueor reclassified any financial asset at fair value, rather than at cost or amortised cost, FRS 107requires disclosure of the amount and reason for the reclassification.

Illustrative disclosure for reclassification of financial assets at cost to fair value:

On 30 November 2015, the Group reclassified its investment in equity instruments of aprivate Singapore company (XXX Pte Ltd) that was previously measured at cost of $XXXto available-for-sale investments measured at fair value of $XXX, when a reliable measureof fair value became available upon its listing on the SGX-ST.

23. Gross amount due from/(to) customers for contract work-in-progress Ê

Group

2015$’000

2014$’000

Aggregate amount of costs incurred and recognised profits (lessrecognised losses) to date 34,089 24,552

Less: Progress billings and advances (33,796) (24,740)

293 (188)

Presented as:

Gross amount due from customers for contract work-in-progress 651 398

Gross amount due to customers for contract work-in-progress (358) (586)

293 (188)

Advances received included in gross amount due to customers forcontract work 45 60

Retention sums on construction contract included in trade receivables 65 80

Commentary:

Advances received before the related work is performed

Ê Where applicable, an entity is required to disclose the amount of advances received fromcustomer before the related construction work is performed.

FRS 107.31

FRS 107.12

FRS 11.40.a

FRS 11.42.a

FRS 11.42.b

FRS 11.40.b

FRS 11.40.c

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 125

24. Development properties ÊÊ

Group

2015$’000

2014$’000

Freehold land 1,800 1,800

Development costs 1,100 850

2,900 2,650

During the financial year, borrowing costs of $35,000 (2014: $33,000), arising fromborrowings obtained specifically for the development property were capitalised under“Development costs”. The rate used to determine the amount of borrowing costs eligiblefor capitalisation was 7.5% (2014: 7.2%), which is the effective interest rate of the specificborrowing. Ë

The freehold land under development has been pledged as security for a bank loan (Note30).

Commentary:

Ê In this illustration, the entire amount included in development property is expected to berecovered or settled no more than twelve months after the reporting period.

If the amount includes amounts expected to be recovered more than twelve months after thereporting period, an entity shall disclose the amount expected to be recovered more thantwelve months after the reporting period.

Borrowing costs capitalised

Ë Please refer to commentary no. 2 of Note 13 Property plant and equipment.

Additional illustrative disclosures:

List of development properties

Ê Where the aggregate value for all properties for development, sale or for investmentpurposes held by the entity represent more than 15% of the value of the consolidated nettangible assets, or contribute more than 15% of the consolidated pre-tax operating profit,entities listed on the SGX-ST are required to disclose further information regardingdevelopment properties.

Illustrative disclosure pursuant to requirements of SGX 1207.11:

Description and location %owned

Site area(squaremetre)

Grossfloor area(squaremetre)

Stage of completionas at date of annual

report (expectedyear of completion)

An 8-storey luxurious condominium (SnowQueen Palace) development along PatersonRoad, Singapore

100% 20,500 220,000 60% (2014)

A 35-storey integrated development withresidential apartments, offices and retailcomponents along Tian Shan Road, ChangningDistrict, Shanghai, People’s Republic of China

100% 98,000 450,000 70% (2014)

A 20-storey luxurious condominium (LinkSpring Tower) along HuBei Road, HangguDistrict, Tianjin, People’s Republic of China

100% 88,000 300,000 30% (2015)

FRS 23.26.a andb

FRS 2.36.h

FRS 1.61

SGX 1207.11

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Notes to the financial statementsFor the financial year ended 31 December 2015

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25. Inventories

Group

2015$’000

2014$’000

Balance sheet:

Raw materials (at cost) 4,994 5,552

Work-in-progress (at cost) 3,823 3,491

Finished goods (at cost or net realisable value) 15,203 15,357

24,020 24,400

Income statement:

Inventories recognised as an expense in cost of sales 80,567 82,122

Inclusive of the following charge/(credit):

- Inventories written-down 352 257

- Reversal of write-down of inventories (190) –

The reversal of write-down of inventories was made when the related inventories weresold above their carrying amounts in 2014.

The Group has subjected finished goods amounting to $1,500,000 (2014: $1,500,000),to a floating charge as security for bank overdraft facilities (Note 30).

FRS 1.77 and 78.c

FRS 2.36.b

FRS 2.36.d

FRS 2.36.e

FRS 2.36.f

FRS 2.36.g

FRS 2.36.h

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26. Derivatives

Group

2015

$’000

2014

$’000

Contract/NotionalAmount Assets Liabilities

Contract/NotionalAmount Assets Liabilities

Forward currency contracts 9,850 150 (22) 8,560 60 –

Interest rate swap 2,500 20 – 2,500 45 –

170 (22) 105 –

Total derivatives 170 (22) 105 –Add: Held for trading

investments (Note 22) 1,512 – 1,260 –Add: Contingent consideration

for business combination (Note32) – (685) – –

Total financial assets/(liabilities)at fair value through profit orloss� 1,682 (707) 1,365 –

At the Company level, the carrying amount of financial liability at fair value through profitor loss � is the contingent consideration for business combination amounting to$685,000 as at 31 December 2015 (2014: Nil).

Forward currency contracts are used to hedge foreign currency risk arising from theGroup’s sales and purchases denominated in USD for which firm commitments existed atthe end of the reporting period, extending to March 2015 (2014: March 2014) (Note40(d)).

The interest rate swap receives floating interest equal to SIBOR + 3% p.a. (2014: SIBOR +3% p.a.), pays a fixed rate of interest of 7.5% p.a. (2014: 7.5% p.a.) and matures on 30November 2015 (2014: 30 November 2014).

Commentary:

Categories of financial assets and financial liabilities

� Please refer to commentary no. 1 of Note 22 Investment securities.

FRS 107.7and 31

FRS 107.8.aand e

FRS 107.8.e

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Notes to the financial statementsFor the financial year ended 31 December 2015

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27. Cash and short-term deposits

Group Company

2015

$’000

2014

$’000

2015

$’000

2014

$’000

Cash at banks and on hand 5,697 4,598 4,256 3,985

Short-term deposits 420 260 365 160

Cash and short-term deposits 6,117 4,858 4,621 4,145

Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and three months,depending on the immediate cash requirements of the Group and the Company, and earninterests at the respective short-term deposit rates. The weighted average effectiveinterest rates as at 31 December 2015 for the Group and the Company were 2.60%(2014: 2.80%) and 0.15% (2014: 0.20%) respectively.

Cash and short-term deposits denominated in foreign currencies at 31 December are asfollows:

Group Company

2015

$’000

2014

$’000

2015

$’000

2014

$’000

United States Dollar 442 325 108 120

Renminbi 20 15 8 5

For the purpose of the consolidated cash flow statement, cash and cash equivalentscomprise the following at the end of the reporting period:

Group

Cash and short-term deposits:

2015

$’000

2014

$’000

- Continuing operations 6,117 4,858

- Discontinued operation (Note 11) 250 –

6,367 4,858

Bank overdrafts (Note 30) (498) (1,444)

Cash and cash equivalents Ê 5,869 3,414

Commentary:

Ê In this illustration, it is assumed that the Group does not have any cash and cash equivalentsthat are not available for use by the Group.

Where applicable, disclosure is required, together with a commentary by management, for theamount of significant cash and cash equivalent balances held by the enterprise that are notavailable for use by the group. There are various circumstances in which cash and cashequivalent balances held by an enterprise are not available for use by the group. Examplesinclude cash and cash equivalent balances held by a subsidiary that operates in a countrywhere exchange controls or other legal restrictions apply when the balances are not availablefor general use by the parent or other subsidiaries.

Cash and cash equivalents which are restricted in its use for more than twelve months shall beclassified as non-current assets.

FRS 107.7 and 31

FRS 107.7,31 and34

FRS 107.34.a

FRS 7.45

FRS 7.48

FRS 7.49

FRS 1.66.d

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Notes to the financial statementsFor the financial year ended 31 December 2015

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28. Provisions �

Group

Maintenancewarranties Legal claim Total

$’000 $’000 $’000

At 1 January 2015 2,136 – 2,136

Acquisition of a subsidiary (Note 17) 50 – 50

Arose during the financial year 116 420 536

Utilised (415) – (415)

Unused amounts reversed (60) – (60)

Discount rate adjustment 30 – 30

Exchange differences 45 4 49

At 31 December 2015 1,902 424 2,326

Current 2015 377 424 801

Non-current 2015 1,525 – 1,525

1,902 424 2,326

Current 2014 295 – 295

Non-current 2014 1,841 – 1,841

2,136 – 2,136

Maintenance warranties

A provision is recognised for expected warranty claims on certain specialised electroniccomponents sold during the last two years, based on past experience of the level ofrepairs and returns. It is expected that most of these costs will be incurred in the next twofinancial years and all will have been incurred within three years from the end of thereporting period. Assumptions used to calculate the provision for maintenance warrantieswere based on current sales levels and current information available about returns basedon the three-year warranty period for the relevant specialised electronic componentssold.

During the financial year, based on the earlier mentioned statistics and warranty claimsexperience, management concluded that the provision for maintenance warrantiesexceeded the amount necessary to cover warranty claims on products sold during the lasttwo years. Accordingly, $60,000 (2014: nil) of the warranty provision has been reversed.

Legal claim

On 30 June 2015, a competitor of the Group made a claim against one of the Group’ssubsidiaries for infringing its technology licence from 2014 to 2015. At the end of thereporting period, the management is in the process of negotiating a settlementagreement with the plaintiff. The provision made represents the management’s estimateof the settlement consideration, being the account of profit for the periods covered by thelicence. The settlement and compensation is expected to be concluded in 2015.

Commentary:

Comparative of movements in provision

Ê FRS 37 does not require comparatives of movements in provision to be presented.

FRS 1.77 and78.d

FRS 37.84.a

FRS 37.84.b

FRS 37.84.c

FRS 37.84.d

FRS 37.84.e

FRS 37.84.a

FRS 37.85

FRS 1.98.g

FRS 37.85

FRS 37.84

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28. Provisions � (continued)

Commentary (continued):

Contingent liability

� In this illustration, no contingent liabilities are recognised in the business combination.

For contingent liabilities recognised in a business combination, the acquirer is required todisclose the information required by paragraphs 84 and 85 of FRS 37 Provisions,Contingent Liabilities and Contingent Assets for each class of provision.

29. Deferred capital grants

Group

2015

$’000

2014

$’000

Cost:

At 1 January 2,694 1,644

Received during the financial year 2,040 1,030

Exchange differences 34 20

At 31 December 4,768 2,694

Accumulated amortisation:

At 1 January 730 540

Amortisation 239 180

Exchange differences 11 10

At 31 December 980 730

Net carrying amount:

Current 300 210

Non-current 3,488 1,7543,788 1,964

Deferred capital grants relate to government grants received for the acquisition ofequipment for research activities undertaken by the Group’s subsidiary in People’sRepublic of China to promote technology advancement and transfer. There are nounfulfilled conditions or contingencies attached to these grants.

FRS 103.B67.c

FRS 20.39.b

FRS 20.39.c

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30. Loans and borrowings Ê

MaturityGroup Company

Maturity

2015

$’000

2014

$’000

2015

$’000

2014

$’000

Current:

Obligations under finance leases (Note37(d)) 2015 216 16 – –

Bank overdrafts On demand 498 1,444 – –

6% p.a. fixed rate SGD bank loan 2015 475 830 – –

1,189 2,290 – –

Non-current:Obligations under finance leases (Note37(d)) 2017-2025 720 160 – –

7.5% p.a. fixed rate SGD bonds 2017-2021 3,100 3,000 3,100 3,000

Bank loans:

- 8% p.a. fixed rate USD loan 31 July 2021 1,545 – – –

- SGD loan at LIBOR + 2.0% p.a. 2017-2021 2,200 2,200 2,200 2,200

- SGD loan at SIBOR + 3.0% p.a. 30 November 2019 5,400 5,400 – –

- 8.5% p.a. fixed rate SGD loan – – 2,000 – –

Convertible redeemable preference shares 2018-2021 450 428 450 428

13,415 13,188 5,750 5,628

Total loans and borrowings 14,604 15,478 5,750 5,628

Obligations under finance leases

These obligations are secured by a charge over the leased assets (Note 13). The averagediscount rate implicit in the leases is 8.5% p.a. (2014: 8.8% p.a.). These obligations aredenominated in the respective functional currencies of the relevant entities in the Group.

Bank overdrafts

Bank overdrafts are denominated in SGD, bear interest at SIBOR + 3.0% p.a. (2014:SIBOR + 3.0% p.a.) and are secured by a floating charge over certain inventories (Note25).

6% p.a. fixed rate SGD bank loan

This loan is fully repayable on 30 June 2016 (2014: 30 June 2015) and is secured by acharge over freehold land under development (Note 24).

7.5% p.a. fixed rate SGD bonds

These bonds with a face value of $3,200,000 are unsecured and are repayable in 5 equalannual instalments commencing on 1 January 2017.

8% p.a. fixed rate USD bank loan

This loan has been drawn down under a six-year multi-option facility (MOF). The loan isrepayable within 12 months after the reporting date, but has been classified as long-termbecause the Group expects and has the discretion to exercise its rights under the MOF torefinance this funding. Such immediate replacement funding is available until 31 January2020. The total amount repayable on maturity is $1,600,000. The facility is secured by afirst mortgage over certain freehold land and buildings of the Group (Note 13).

FRS 107.7 and31

FRS 1.73

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 132

30. Loans and borrowings Ê (continued)

SGD bank loan at LIBOR + 2.0% p.a.

This loan is secured by a first mortgage over certain investment properties (Note 14) ofthe Group and is repayable in two equal instalments due on 31 December 2017 and 31January 2021. The loan includes a financial covenant which requires the Group tomaintain a gearing ratio not exceeding 50%.

SGD bank loan at SIBOR + 3.0% p.a.

This loan is secured by a first mortgage over certain of the Group’s freehold land andbuildings (Note 13), a charge over certain investment securities (Note 22) of the Groupand corporate guarantee provided by the Company (Note 38(a)). Repayment of this loanis due on 30 November 2019. The loan includes a financial covenant which requires theGroup to maintain a net current asset and net asset positions throughout the tenure ofthe loan.

8.5% p.a. fixed rate SGD loan

As at 31 December 2015, this loan has been presented as part of the liabilities of thedisposal group classified as held for sale (Note 11).

Convertible Redeemable Preference Shares Ë

As at 31 December 2015 and 2014, there were 505,000 Convertible RedeemablePreference Shares (CRPS) issued and fully paid. The shares were issued at $1 each andare convertible at the option of the shareholders into ordinary shares of the Company on1 January 2018 on the basis of one ordinary share for every preference share held. Anypreference shares not converted will be redeemed on 31 December 2020 at a price of$1.20 per share. The preference shares carry a dividend of 8% p.a., payable half-yearly inarrears on 30 June and 31 December. The dividend rights are non-cumulative and theshareholders have no voting rights.

The carrying amount of the liability component of CRPS at the end of the reporting periodis arrived at as follows:

Group and Company

2015

$’000

2014

$’000

Face value of CRPS 505 505Equity component (96) (96)

Liability component of CRPS at initial recognition 409 409

Add: Accumulated amortisation of discount

- Opening balance at 1 January 19 –

- Amortisation of discount during the financial year 22 19

- Closing balance at 31 December 41 19

Liability component of CRPS at the end of the reporting period 450 428

FRS 107.7FRS 32.28 and 31

FRS 32.28

FRS 32.28

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 133

30. Loans and borrowings Ê (continued)

Commentary:

Defaults or breaches

� If during the period, there were defaults or breaches of loan agreement terms, the entityshould disclose:

(a) Details of any defaults during the period of principal, interest, sinking fund, orredemption terms of those loans payable;

(b) The carrying amount of the loans payable in default at the reporting date; and

(c) Whether the default was remedied, or the terms of the loans payable were renegotiated,before the financial statements were authorised for issue.

These disclosure requirements are also applicable to breaches of loan agreement terms otherthan those mentioned above whose breaches permitted the lender to demand acceleratedrepayment (unless the breaches were remedied, or the terms of the loan were renegotiated,on or before the reporting date). Ê

Compound financial instruments with multiple embedded derivatives

� If an entity has issued an instrument that contains both a liability and an equity componentand the instrument has multiple embedded derivatives whose values are interdependent (suchas a callable convertible debt instrument), it shall disclose the existence of those features.

Additional illustrative disclosures:

Defaults or breaches

Ê Illustrative note disclosure for default on interest payment:

The Company has defaulted in interest payment of $XXX on bank borrowings carried at$XXX at the end of the reporting period. The Company experienced a temporary shortageof funds due to decrease in market demand in the Company’s products in the first twoquarters. The interest payable of $XXX which was overdue since October 2015 remainedunpaid as at the date when these financial statements were authorised for issue.

Illustrative note disclosure for breach of loan covenant:

During the current financial year, the Company breached a covenant of a bank loan. TheCompany did not fulfil the requirement to maintain gearing ratio at X.XX for a credit line of$XXX. The credit line was fully drawn down and presented as current liability at the end ofthe reporting period. The bank is contractually entitled to request for immediaterepayment of the outstanding loan amount in the event of breach of covenant.

The bank had not requested for immediate repayment of the outstanding loan amount asat the date when these financial statements were authorised for issue. Managementcommenced renegotiation of the loan agreement terms in December 2015. As of the datethe financial statements were authorised for issue, the renegotiation was still in progress.

FRS 107.18

FRS 107.19

FRS 107.17

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 134

31. Trade and other payables

Group Company

2015

$’000

2014

$’000

2015

$’000

2014

$’000

Trade and other payables (current):Trade payables 15,698 17,426 332 290

Other payables 1,381 1,129 138 124

Amounts due to related companies 288 379 – –

17,367 18,934 470 414

Other payables (non-current):

Deferred cash settlement (Note 17) 200 – – –

Total trade and other payables 17,717 19,140 470 414

Add:

- Other liabilities (Note 32) 2,974 2,579 481 446

- Loans and borrowings (Note 30) 14,604 15,478 5,750 5,628

Total financial liabilities carried at amortisedcost Ê 35,295 36,197 6,701 6,488

Trade payables/other payables

These amounts are non-interest bearing. Trade payables are normally settled on 60-dayterms while other payables have an average term of six months.

Trade payables denominated in foreign currencies as at 31 December are as follows:

Group Company

2015

$’000

2014

$’000

2015

$’000

2014

$’000

United States Dollar 3,140 2,962 66 49

Amounts due to related companies

These amounts are trade related, unsecured, non-interest bearing, repayable on demandand are to be settled in cash.

Purchases from related companies are made at terms equivalent to those prevailing inarm’s length transactions with third parties. Ë

Commentary:

Categories of financial assets and financial liabilities

Ê Please refer to commentary no. 1 of Note 22 Investment securities.

Ë Disclosures that related party transactions were made on terms equivalent to those thatprevail in arm’s length transactions are made only if such terms can be substantiated.

FRS 1.77FRS 107.7 and 31

FRS 24.18

FRS 107.8.f

FRS 107.7 and 31

FRS 107.34.a

FRS 107.7 and 31FRS 24.18

FRS 24.23

FRS 24.23

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 135

32. Other liabilities

Group Company

2015$’000

2014$’000

2015$’000

2014$’000

Accrued operating expenses 2,948 2,571 401 346

Financial guarantees (Note 38(a)) 26 8 80 100

2,974 2,579 481 446

Contingent consideration for businesscombination Ê (Note 17) 685 – 685 –

3,659 2,579 1,166 446

Contingent consideration for business combination

As part of the purchase agreement with the previous owner of MSAX, a contingentconsideration has been agreed. This consideration is dependent on the profit before tax ofMSAX during a 12-month period. The fair value at the acquisition date was $450,000,which has been adjusted as of 31 December 2015 due to a significantly enhancedperformance compared to budget to a fair value of $685,000. The consideration is duefor final measurement and payment to the former shareholders on 18 October 2015. Nofurther significant change to the consideration is expected.

Additional illustrative disclosures:

Contingent consideration for business combination

Ê Illustrative note disclosure for contingent consideration for business combination when theamount is finalised in 2015:

Note X Other liabilitiesAs part of the purchase agreement with the previous owners of MSAX dated 18 October2015, a portion of the consideration was determined to be contingent on theperformance of the acquired entity. At 18 October 2015, a total of $700,000 was paid tothe previous owner of MSAX under this arrangement.

As of 31 December 2014 and prior to payment, the fair value of the contingentconsideration was reassessed which led to additional cost charged to profit or loss.The initial fair value of the consideration of $450,000 is included in cash flows frominvesting activities, the remainder, totalling to $250,000, is recognised in cash flowsfrom operating activities.

Group

2015$’000

Initial fair value of the contingent consideration at acquisition date 450 Fair value adjustment as at 31 December 2015 235 Financial liability for the contingent consideration as of 31 December 2015 685 Fair value adjustment as at 18 October 2015 15 Total consideration paid 700

Extract of Consolidated Cash Flow Statement Group

2015$’000

Cash flows from operating activities:

Settlement of contingent consideration for business combination ( 250)

Cash flows from investing activities:

Settlement of contingent consideration for business combination (450)

FRS 1.77FRS 107.7 and 31

FRS 103.B64

FRS 103.B64.g.i

FRS 103.58

FRS 7.16

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 136

33. Share capital and treasury shares

a) Share capital

Group and Company FRS 1.79

2015 2014

No. ofshares‘000 $’000

No. ofshares‘000 $’000

Issued and fully paid ordinary shares FRS 1.79.a.ii

At 1 January 23,080 9,665 22,940 9,510 FRS 1.79.a. iv

Issued for acquisition of a subsidiary(Note 17) 1,305 1,475 – –

Share issuance expense (Note 17) – (50) – – FRS 32.37

Exercise of employee share options(Note 35) – – 140 155 FRS 102.50

At 31 December 24,385 11,090 23,080 9,665FRS 1.79.a.ii andiv

The holders of ordinary shares (except treasury shares) are entitled to receivedividends as and when declared by the Company. All ordinary shares carry one vote pershare without restrictions. The ordinary shares have no par value.

The Company has two employee share option plans under which options to subscribefor the Company’s ordinary shares have been granted to employees of the Group.

b) Treasury shares

Group and Company

2015 2014

No. ofshares‘000 $’000

No. ofshares‘000 $’000

At 1 January – – – –

Acquired during the financial year (200) (254) – –Reissued pursuant to employee share option

plans:- For cash on exercise of employee share

options (Note 35) 75 81 – –- Transferred from employee share option

reserve – 79 – –- Gain transferred to gain or loss on reissuance

of treasury shares – (65) – –

75 95 – –

At 31 December (125) (159) – –

Treasury shares relate to ordinary shares of the Company that is held by the Company.

The Company acquired 200,000 (2014: nil) shares in the Company through purchaseson the Singapore Exchange during the financial year. The total amount paid to acquirethe shares was $254,000 (2014: nil) and this was presented as a component withinshareholders’ equity.

The Company reissued 75,000 (2014: nil) treasury shares pursuant to its employeeshare option plans at a weighted average exercise price of $1.08 (2014: nil) each.

FRS 1.79.a.v

FRS 1.79.a.iii

FRS 1.79.a.vii

FRS 1.79.a.vi

FRS 32.33

FRS 1.77 and 78.e

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 137

34. Other reserves

a) Fair value adjustment reserveFair value adjustment reserve represents the cumulative fair value changes, net of tax,of available-for-sale financial assets until they are disposed of or impaired.

b) Asset revaluation reserve

The asset revaluation reserve represents increases in the fair value of freehold landand buildings, net of tax, and decreases to the extent that such decrease relates to anincrease on the same asset previously recognised in other comprehensive income.

c) Statutory reserve fund

In accordance with the Foreign Enterprise Law applicable to the subsidiary in thePeople’s Republic of China (PRC), the subsidiary is required to make appropriation to aStatutory Reserve Fund (SRF). At least 10% of the statutory profits after tax asdetermined in accordance with the applicable PRC accounting standards andregulations must be allocated to the SRF until the cumulative total of the SRF reaches50% of the subsidiary’s registered capital. Subject to approval from the relevant PRCauthorities, the SRF may be used to offset any accumulated losses or increase theregistered capital of the subsidiary. The SRF is not available for dividend distribution toshareholders.

d) Foreign currency translation reserve

The foreign currency translation reserve represents exchange differences arising fromthe translation of the financial statements of foreign operations whose functionalcurrencies are different from that of the Group’s presentation currency.

e) Employee share option reserve

Employee share option reserve represents the equity-settled share options granted toemployees (Note 35). The reserve is made up of the cumulative value of servicesreceived from employees recorded over the vesting period commencing from the grantdate of equity-settled share options, and is reduced by the expiry or exercise of theshare options.

f) Gain or loss on reissuance of treasury shares

This represents the gain or loss arising from purchase, sale, issue or cancellation oftreasury shares. No dividend may be paid, and no other distribution (whether in cash orotherwise) of the Company’s assets (including any distribution of assets to members ona winding up) may be made in respect of this reserve.

g) Equity component of convertible redeemable preference shares

This represents the residual amount of convertible redeemable preference shares(CRPS) after deducting the fair value of the liability component. This amount ispresented net of transaction costs and deferred tax liability arising from the CRPS.

FRS 1.79.b

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 138

35. Employee benefits

Group

2015$’000

2014$’000

Employee benefits expense (including directors):

Salaries and bonuses 17,758 16,332

Central Provident Fund contributions 2,107 2,166

Share-based payments (Employee share option plans) 245 150

Other short-term benefits 392 376

20,502 19,024

Employee share option plans Ê

Senior executive option plan

Under the senior executive option plan (SEOP), share options are granted to seniorexecutives with more than 12 months’ service. The exercise price of the options is equalto the market price of the shares on the date of grant. The options vest if and when theGroup’s earnings per share amount increases by 12%, within three years from the date ofgrant. If this increase is not met, the options will lapse. The contractual life of each optiongranted is five years. There are no cash settlement alternatives. The Group does not havea past practice of cash settlement for these share options.

General employee share option plan

All other employees are entitled to a grant of options, under the general employee shareoption plan (GESP), once they have been in service for two years. The vesting of theoptions is dependent on the total shareholder return (TSR) of the Group as compared to agroup of principal competitors. Employees must remain in service for a period of threeyears from the date of grant. The exercise price of the options is equal to the market priceof the shares on the date of grant. The contractual life of the options is five years. Thereare no cash settlement alternatives. The Group does not have a past practice of cashsettlement for these awards.

There has been no cancellation or modification to the SEOP and GEOP during both 2015and 2015.

Movement of share options during the financial year

The following table illustrates the number (No.) and weighted average exercise prices(WAEP) of, and movements in, share options during the financial year:

2015 2014

No. WAEP ($) No. WAEP ($)

Outstanding at 1 January 425,000 1.22 480,000 1.20 FRS 102.45.b.i

- Granted 200,000 1.30 125,000 1.26 FRS 102.45.b.ii

- Forfeited – – (25,000) 1.05 FRS 102.45.b.iii

- Exercised (75,000) 1.08 (140,000) 1.11 FRS 102.45.b.iv

- Expired (25,000) 1.16 (15,000) 1.15 FRS 102.45.b.v

Outstanding at 31 December 525,000 1.24 425,000 1.22 FRS 102.45.b.vi

Exercisable at 31 December 200,000 1.18 195,000 1.10 FRS 102.45.b.vii

FRS 19.46

FRS 102.51.a

FRS 1.104

FRS 102.44

FRS 102.45.a

FRS 102.45.a

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 139

35. Employee benefits (continued)

Employee share option plans Ê (continued)

Movement of share options during the financial year (continued)

- The weighted average fair value of options granted during the financial year was$1.14 (2014: $1.03).

- The weighted average share price at the date of exercise of the options exercisedduring the financial year was $1.30 (2014: $1.20). Ë

- The range of exercise prices for options outstanding at the end of the year was $1.05to $1.30 (2014: $1.05 to $1.26). Ì The weighted average remaining contractual lifefor these options is 3.90 years (2014: 3.86 years).

Fair value of share options granted

The fair value of the share options granted under the SEOP is estimated at the grant dateusing a binomial option pricing model, taking into account the terms and conditions uponwhich the share options were granted.

The fair value of share options granted under the GESP is estimated at the date of thegrant using a Monte Carlo simulation model, taking into account the terms and conditionsupon which the options were granted. The model simulates the TSR and compares itagainst the group of principal competitors. It takes into account historic dividends, shareprice fluctuation covariance of the Company and each entity of the group of competitorsto predict the distribution of relative share performance.

The following table lists the inputs to the option pricing models for the years ended 31December 2015 and 2014:

SEOP (Binomial) GESP (Monte Carlo)

2015 2014 2015 2014

Dividend yield (%) 3.13 3.01 3.13 3.01Expected volatility (%) 15.00 16.30 16.00 17.50Risk-free interest rate (% p.a.) 4.10 4.00 4.10 4.00Expected life of option (years) 4.05 4.25 4.85 4.65Weighted average share price ($) 1.30 1.20 1.30 1.20

The expected life of the share options is based on historical data and is not necessarilyindicative of exercise patterns that may occur. The expected volatility reflects theassumption that the historical volatility over a period similar to the life of the options isindicative of future trends, which may not necessarily be the actual outcome.

FRS 102.47.a

FRS 102.45.c

FRS 102.45.d

FRS 102.46

FRS 102.47.a.i

FRS 102.47.a.i and iii

FRS 102.47.a.i

FRS 102.47.a.ii

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 140

35. Employee benefits (continued)

Commentary:

Cash-settled share-based payment transactions

Ê In this illustration, all the share-based payment transactions are equity-settled. If an entity hasshare-based payment transactions that are either cash-settled or with cash alternatives (forexample, share appreciation rights), the entity should disclose:

- The total expense recognised for the period arising from the share-based paymenttransactions;

- The total carrying amount of liabilities at the end of the period; and

- The total intrinsic value at the end of the period of liabilities for which the counterparty’sright to cash or other assets had vested by the end of the period (e.g., vested shareappreciation rights). Ê

Weighted average share price

Ë If options were exercised on a regular basis throughout the period, an entity may insteaddisclose the weighted average share price during the period.

Range of exercise prices

Ì If the range of exercise prices is wide, the outstanding options shall be divided into ranges thatare meaningful for assessing the number and timing of additional shares that may be issuedand the cash that may be received upon exercise of those options.

Additional illustrative disclosures:

Cash-settled share-based payment transactions

Ê Illustrative note disclosures:

Share Appreciation Rights (SARs) Plan

Business development managers in the electronic components segment are granted shareoptions, which can only be settled in cash. These SARs will vest when a specified targetnumber of new sales contracts are closed. The contractual life of the options is six years.

The expense recognised in profit or loss granted under the Share Appreciation Rights Planduring the financial year is $XXX (2014: $XXX).

The carrying amount of the liability recognised in the Group’s and the Company’s balancesheets relating to such share options at 31 December 2015 is $XXX (2014: $XXX).

No Share Appreciation Rights granted under this plan had vested at the end of thereporting period (2014: nil).

FRS 102.51.a and b

FRS 102.45.c

FRS 102.45.d

FRS 102.45.a

FRS 102.51.a

FRS 102.51.b.i

FRS 102.51.b.ii

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 141

36. Related party transactions

a) Sale and purchase of goods and services

In addition to the related party information disclosed elsewhere in the financialstatements, the following significant transactions between the Group and relatedparties took place at terms agreed between the parties during the financial year: ÊËÌ

Group

2015$’000

2014$’000

Sale of finished goods to:

- Related companies 700 890

- Associates 50 30

- A company related to a director 225 135

Purchase of raw materials from:

- Related companies 1,058 1,200

- Associates 140 106

Purchase of accounting services from a firm related to a director 25 18

Management fees from joint venture 50 60

Interest income from:

- Associates 80 76

- A fellow subsidiary 98 92

Related companies:

These are subsidiaries and associates of Good Group (International) Ltd and itssubsidiaries, excluding entities within the Group.

Company / firm related to a director:

- One of the directors of the Company, through his 25% (2014: 25%) equity interest inUnik-One Pte Ltd (UOPL), had an interest in a contract for the supply of specialiseddigital components to UOPL. During the financial year, the Group sold specialiseddigital components of $225,000 (2014: $135,000) to UOPL. No balance with UOPLwas outstanding at the end of the reporting period (2014: nil).

- The Group has entered into a contract with LPS Associates LLP, a firm of which thewife of one of the directors of the Company is the managing partner, for theprovision of consolidation accounting services to the Company for an amount of$25,000 (2014: $18,000). No balance with the firm was outstanding at the end ofthe reporting period (2014: nil).

b) Commitments with related parties

On 1 July 2015, XYZ Technologies Pte Ltd entered into a two-year agreement ending30 June 2017 with XYZ China Co. Ltd to purchase specific electrical and optionalcables that XYZ Technologies Pte Ltd uses in its production cycle. XYZ TechnologiesPte Ltd expects the potential purchase volume to be $400,000 in 2016 and $300,000in the first 3 months of 2017. The purchase price is based on XYZ China Co. Ltd’sactual cost plus 5% margin and will be settled in cash within 30 days after receiving theinventory.

FRS 24.18

FRS 24.19

FRS 24.18

FRS 24.18.b

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 142

36. Related party transactions (continued)

c) Compensation of key management personnel Í

Group

2015$’000

2014$’000

Short-term employee benefits 4,938 4,352

Central Provident Fund contributions 355 357

Other short-term benefits 25 80

Share-based payments 80 60

5,398 4,849

Comprise amounts paid to:

Directors of the Company 3,470 3,119

Other key management personnel 1,928 1,730

5,398 4,849

Directors’ interests in employee share option plan

During the financial year:

- 37,000 (2014: 25,000) share options were granted to two of the Company'sexecutive directors under the SEOP (Note 35) at an exercise price of $1.30 (2014:$1.26) each.

- These directors exercised options for 10,000 (2014: 5,000) ordinary shares of theCompany at a price of $1.05 (2014: $1.05) each, with a total cash consideration of$10,500 (2014: $5,250) paid to the Company.

At the end of the reporting period, the total number of outstanding share optionsgranted by the Company to the abovementioned directors under the SEOP amount to120,000 (2014: 93,000). No share options have been granted to the Company's non-executive directors.

Commentary:

Related party transactions

Ê An entity should make disclosures for transactions with related parties separately for each ofthe following categories:

(a) the parent;(b) entities with joint control or significant influence over the entity;(c) subsidiaries;(d) associates;(e) joint ventures in which the entity is a venturer;(f) key management personnel of the entity or its parent; and(g) other related parties.

Such categorisation help provide a more comprehensive analysis of related party balances andtransactions.

FRS 24.17

FRS 24.18

FRS 24.19 and 20

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 143

36. Related party transactions (continued)

Commentary (continued):

Related party transactions

Ë The following are examples of transactions that are disclosed if they are with a related party:(a) purchases or sales of goods (finished or unfinished);(b) purchases or sales of property and other assets;(c) rendering or receiving of services;(d) leases;(e) transfers of research and development;(f) transfers under licence agreements;(g) transfers under finance arrangements (including loans and equity contributions in cash or

in kind);(h) provision of guarantees or collateral;(i) commitments to do something if a particular event occurs or does not occur in the future,

including executor contracts (recognised and unrecognised); and(j) settlement of liabilities on behalf of the entity or by the entity on behalf of that related

party.

Ì Items of a similar nature may be disclosed in aggregate except when separate disclosure isnecessary for an understanding of the effects of related party transactions on the financialstatements of the entity.

Key management personnel Ê

Í Key management personnel are those persons having authority and responsibility for planning,directing and controlling the activities of the entity, directly or indirectly, including any director(whether executive or otherwise) of that entity.

Additional illustrative disclosures:

Transactions with key management personnel

Ê In this illustration, the Group does not have any transactions and outstanding balances,including commitments with key management personnel, close family members of keymanagement personnel and entities which the key management personnel have control or jointcontrol.

Illustrative disclosure when the Group have such transactions are as follows:

The transactions and outstanding balances related to key management personnel, closefamily members of key management personnel and entities in which the key managementpersonnel have control or joint control were as follows:

GroupTransactions during

the yearOutstanding

balances as at 31December

Related parties Transactions 2015$’000

2014$’000

2015$’000

2014$’000

Mrs. May Lim Legal fees (a) - XXX - XXXDraco Pte. Ltd. Purchase of office

stationeries (b) XXX XXX XXX -

(a) The Group uses the legal services provided by Mrs. May Lim who is a close family memberof Mr. Goh Hock Inn, a Director of the Company. The legal fees paid were in relation topurchase of certain non-current assets of the Group. The fees charged were based onnormal market rates for such services and were due and payable under normal paymentterms.

(b) The Group purchases its office stationeries from Draco Pte. Ltd., a Company controlled byMr. Goh Hock Inn, a Director of the Company. These purchases are based on normalmarket rates for such supplies and were due and payable under normal payment terms.

FRS 24.21

FRS 24.24

FRS 24.9

FRS 24.18.a,b

FRS 24.18.b

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37. Commitments

a) Capital commitments

Capital expenditure contracted for as at the end of the reporting period but notrecognised in the financial statements are as follows:

Group Company

2015$’000

2014$’000

2015$’000

2014$’000

Capital commitments in respect ofproperty, plant and equipment 1,690 550 90 55

Share of joint venture’s capitalcommitments in relation to investmentproperties Ê 63 168 – –

1,753 718 90 55

b) Operating lease commitments – as lessee

In addition to the land use rights disclosed in Note 16, the Group has entered intocommercial leases on certain motor vehicles and office equipment. These leases havean average tenure of between three and six years with no renewal option or contingentrent provision included in the contracts. The Group is restricted from subleasing theleased equipment to third parties.

Minimum lease payments, including amortisation of land use rights recognised as anexpense in profit or loss for the financial year ended 31 December 2015 amounted to$484,000 (2014: $387,000).

Future minimum rental payable under non-cancellable operating leases (excluding landuse rights) at the end of the reporting period are as follows: Ë

Group

2015$’000

2014$’000

Not later than one year 370 352

Later than one year but not later than five years 800 926

Later than five years 115 126

1,285 1,404

c) Operating lease commitments – as lessorThe Group has entered into commercial property leases on its investment properties.These non-cancellable leases have remaining lease terms of between two and eightyears. All leases include a clause to enable upward revision of the rental charge on anannual basis based on prevailing market conditions.

Future minimum rental receivable under non-cancellable operating leases at the end ofthe reporting period are as follows: Ë

Group

2015$’000

2014$’000

Not later than one year 492 440

Later than one year but not later than five years 1,968 1,760

Later than five years 1,400 1,110

3,860 3,310

FRS 16.74.c

FRS 112.23.aFRS 40.75.h

FRS 17.35.d

FRS 17.35.c

FRS 17.35.a

FRS 17.56.c

FRS 17.56.a

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37. Commitments (continued)

Commentary:

Ê An entity shall disclose total commitments it has made but not recognised at the reporting date(including its share of commitments made jointly with other investors with joint control of ajoint venture) relating to its interests in joint ventures. Commitments are those that may giverise to a future outflow of cash or other resources.

Unrecognised commitments that may give rise to a future outflow of cash or other resourcesinclude:

(a) unrecognised commitments to contribute funding or resources as a result of, for example:

i. the constitution or acquisition agreements of a joint venture (that, for example,require an entity to contribute funds over a specific period).

ii. capital-intensive projects undertaken by a joint venture.

iii. unconditional purchase obligations, comprising procurement of equipment, inventoryor services that an entity is committed to purchasing from, or on behalf of, a jointventure.

iv. unrecognised commitments to provide loans or other financial support to a jointventure.

v. unrecognised commitments to contribute resources to a joint venture, such as assetsor services.

vi. other non-cancellable unrecognised commitments relating to a joint venture.

(b) Unrecognised commitments to acquire another party’s ownership interest (or a portion ofthat ownership interest) in a joint venture if a particular event occurs or does not occur inthe future.

Future minimum lease payments under non-cancellable operating leases

Ë The disclosure of future minimum lease payments according to time bands relates only to non-cancellable operating leases. A non-cancellable lease is a lease that is cancellable only:

(a) upon the occurrence of some remote contingency;

(b) with the permission of the lessor;

(c) if the lessee enters into a new lease for the same or an equivalent asset with the samelessor; or

(d) upon payment by the lessee of such an additional amount that, at inception of the lease,continuation of the lease is reasonably certain.

A leasing arrangement where the lessee has the right to terminate lease by providing a writtennotice to the lessor without incurring losses significant in comparison to the value of remaininglease payments is generally not considered a non-cancellable lease and is not included in suchdisclosure.

FRS 112.B18

FRS 112.B19

FRS 17.4

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37. Commitments (continued)

d) Finance lease commitments (continued)

The Group has finance leases for certain items of plant and equipment and furnitureand fixtures. These leases have terms of renewal but no purchase options andescalation clauses. Renewals are at the option of the specific entity that holds thelease.

Future minimum lease payments under finance leases together with the present valueof the net minimum lease payments are as follows:

Group

2015$’000

2014$’000

Minimumlease

payments

Presentvalue of

payments(Note 30)

Minimumlease

payments

Presentvalue of

payments(Note 30)

Not later than one year 251 216 30 16

Later than one year but not later thanfive years 392 252 265 120

Later than five years 643 468 117 40

Total minimum lease payments 1,286 936 412 176

Less: Amounts representing financecharges (350) – (236) –

Present value of minimum leasepayments 936 936 176 176

FRS 17.31.e

FRS 17.31.b

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38. Contingencies

a) Contingent liabilities

Legal claim

On 30 November 2015, a customer has commenced an action against the Group inrespect of construction works claimed to be sub-standard. The estimated payout is$250,000 should the action be successful. A trial date has not yet been set andtherefore it is not practicable to state the timing of any payment. The Group has beenadvised by its legal counsel that it is possible, but not probable, that the action willsucceed and accordingly no provision for any liability has been made in these financialstatements.

Guarantees

The Group has provided the following guarantees at the end of the reporting period:

- It has guaranteed its share of $20,000 (2014: $15,000) of the associate’scontingent liabilities which have been incurred jointly with other investors.

- It has guaranteed part of the bank overdraft of the associate to a maximumamount of $300,000 (2014: nil), which it is severally liable for in the event ofdefault by the associate.

- It has guaranteed its interest in its share of the joint venture’s loan of $245,000(2014: $240,000) (Note 30).

- It has guaranteed to an unrelated party the performance of a contract for the jointventure. No liability is expected to arise (2014: nil).

The Company has provided a corporate guarantee to a bank for a $5,400,000 (2014:$5,400,000) loan (Note 30) taken by a subsidiary.

b) Contingent asset

a) A legal claim for defamation of $500,000 was lodged against one of the Group’scompetitors in October 2014. Based on advice from the legal counsel, the Group isconfident that the dispute will be settled in its favour.

b) The Group is claiming amounts (such as variations and additional works under theconstruction contracts) and pending proceedings and disputes with clients. It is notpossible to reasonably determine the extent and timing of possible inflow ofeconomic benefits. These claims are therefore not recognised in these financialstatements.

FRS 37.86

FRS 11.45

FRS 24.20.h

FRS 112.23.b

FRS 112.23.b

FRS 112.23.b

FRS 112.23.b

FRS 24.20.h

FRS 37.89

FRS 11.45

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39. Fair value of assets and liabilities Ê

a) Fair value hierarchy

The Group categorises fair value measurements using a fair value hierarchy that isdependent on the valuation inputs used as follows:

- Level 1 – Quoted prices (unadjusted) in active market for identical assets orliabilities that the Group can access at the measurement date,

- Level 2 – Inputs other that quoted prices included within Level 1 that are observablefor the asset or liability, either directly or indirectly, and

- Level 3 – Unobservable inputs for the asset or liability.

Fair value measurements that use inputs of different hierarchy levels are categorised inits entirety in the same level of the fair value hierarchy as the lowest level input that issignificant to the entire measurement.

Commentary:

Ê An entity shall disclose information that helps users of its financial statements assess both ofthe following:

(a) For assets and liabilities that are measured at fair value on a recurring or non-recurringbasis in the balance sheet after initial recognition, the valuation techniques and inputsused to develop those measurements.

(b) For recurring fair value measurements using significant unobservable inputs (Level 3), theeffect of the measurements on profit or loss or other comprehensive income for theperiod.

To meet the objective above, an entity shall consider all the following:

(a) The level of detail necessary to satisfy the disclosure requirements;

(b) How much emphasis to place on each of the various requirements;

(c) How much aggregation and disaggregation to undertake; and

(d) Whether users of financial statements need additional information to evaluate thequantitative information disclosed.

If the disclosures provided in accordance with FRS 113 and other FRSs are insufficient to meetthe objectives above, an entity shall disclose additional information necessary to meet thoseobjectives.

FRS 113.72

FRS 113.76

FRS 113.81

FRS 113.86

FRS 113.73

FRS 113.91

FRS 113.92

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39. Fair value of assets and liabilities (continued)

b) Assets and liabilities measured at fair value Ê

The following table shows an analysis of each class of assets and liabilities measured atfair value at the end of the reporting period: Ê

Group2015$’000

Fair value measurements at the end of the reporting period using

Quoted prices inactive markets

for identicalinstruments

Significantobservable

inputs otherthan quoted

prices

Significantunobservable

inputs Total

(Level 1) (Level 2) (Level 3)Assets measured at fair value

Financial assets:

Held for trading financial assets (Note 22)

Quoted equity securities 1,512 — — 1,512

Available-for-sale financial assets (Note 22)

Equity securities

Quoted equity securities 1,746 — — 1,746

Unquoted equity securities — — 139 139

Debt securities

Unquoted debt securities - - 1,563 1,563

Derivatives

Forward currency contracts - 150 - 150

Interest rate swap - 20 - 20

Financial assets as at 31 December 2015 3,258 170 1,702 5,130

Non-financial assets: Ë

Investment properties Ì

Commercial - - 2,831 2,831

Residential - 1,814 - 1,814

Property, plant and equipment Ì

Freehold land - - 11,874 11,874

Buildings - - 3,291 3,291

Disposal group classified as held for sale* - - 199 199

Non-financial assets as at 31 December 2015 - 1,814 18,195 20,009

Liabilities measured at fair value Í

Financial liabilities

Derivatives

Forward currency contracts - (22) - (22)Contingent consideration for businesscombination - - (685) (685)

Financial liabilities as at 31 December 2015 - (22) (685) (707)

*Disposal group classified as held for sale with a carrying amount of $649,000 werewritten down to their fair value of $219,000, less costs to sell of $20,000 (or $199,000),resulting in a net loss of $450,000, which was included in the profit or loss for the period.

FRS 113.93.aand b

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39. Fair value of assets and liabilities (continued)

b) Assets and liabilities measured at fair value Ê (continued)

Group

2014$’000

Fair value measurements at the end of the reporting period using

Quoted pricesin active

markets foridentical

instruments

Significantobservable

inputs otherthan quoted

prices

Significantunobservable

inputs Total

(Level 1) (Level 2) (Level 3)

Assets measured at fair value

Financial assets:

Held for trading financial assets (Note 22)

Quoted equity securities 1,260 — — 1,260

Available-for-sale financial assets (Note 22)

Equity securities

Quoted equity securities 848 — — 848

Unquoted equity securities — — 28 28

Debt securities

Unquoted debt securities - - 980 980

Derivatives

Forward currency contracts - 60 - 60

Interest rate swap - 45 - 45

Financial assets as at 31 December 2014 2,108 105 1,008 3,221

Non-financial assets: Ë

Investment properties Ì

Commercial - - 2,380 2,380

Residential - 1,575 - 1,575

Property, plant and equipment Ì

Freehold land - - 10,726 10,726

Buildings - - 3,574 3,574

Non-financial assets as at 31 December 2014 - 1,575 16,680 18,255

c) Level 2 fair value measurements ÊÎ

The following is a description of the valuation techniques and inputs used in the fairvalue measurement for assets and liabilities that are categorised within Level 2 of thefair value hierarchy:

Derivatives

Forward currency contracts and interest rate swap contracts are valued using avaluation technique with market observable inputs. The most frequently appliedvaluation techniques include forward pricing and swap models, using present valuecalculations. The models incorporate various inputs including the credit quality ofcounterparties, foreign exchange spot and forward rates, interest rate curves andforward rate curves.

Residential investment properties

The valuation of residential investment properties are based on comparable markettransactions that consider sales of similar properties that have been transacted in theopen market.

FRS 113.93.aand b

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39. Fair value of assets and liabilities (continued)

d) Level 3 fair value measurements

i) Information about significant unobservable inputs used in Level 3 fair valuemeasurements

The following table shows the information about fair value measurements usingsignificant unobservable inputs (Level 3)

Description Fair Valueas at 31

December2015

Valuationtechniques

Unobservable inputs Range (weightedaverage)

Recurring fair valuemeasurements

Available-for-salefinancial assets:

Unquoted equitysecurities

139 Discountedcash flow

Cost of equity 6% to 11% (7.3%)

Dividend yield 3% to 7.5% (4.6%)

Discount for lack ofmarketability

5% to 20% (4.6%)

Unquoted debtsecurities

1,563 Discountedcash flow

Probability of default 5% to 50% (10%)

Loss severity 40% to 100% (60%)

Contingentconsideration forbusiness combination

(685) Discountedcash flow

Probability of meetingcontractual earningstarget

20% to 100% (60%)

Own credit risk 6% to 10% (8%)

Investment properties

Commercial 2,831 Marketcomparableapproach

Yield adjustments basedon management’sassumptions*

10% to 25% (13%)

Property, plant andequipment

Freehold land 11,874 Marketcomparableapproach

Yield adjustments basedon management’sassumptions*

15% to 30% (20%)

Buildings 3,291 Marketcomparableapproach

Yield adjustments basedon management’sassumptions*

10% to 20% (15%)

Non-recurring fair valuemeasurements

Disposal groupclassified as held forsale

199 Discountedcash flow

Weighted average cost ofcapital

6% to 12% (10.1%)

Long-term revenue growthrate

3% to 5.5% (4.2%)

Long-term pre-taxoperating margin

7.5% to 13% (9.2%)

Discount for lack ofmarketability

5% to 20% (10%)

*The yield adjustments are made for any difference in the nature, location or condition ofthe specific property.

FRS 113.93.d

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39. Fair value of assets and liabilities (continued)

d) Level 3 fair value measurements (continued)

i) Information about significant unobservable inputs used in Level 3 fair valuemeasurements (continued)

Description Fair Valueas at 31

December2014

Valuationtechniques

Unobservable inputs Range (weightedaverage)

Recurring fair valuemeasurements

Available-for-salefinancial assets:

Unquoted equitysecurities

28 Discountedcash flow

Cost of equity 6% to 11% (7.3%)

Dividend yield 3% to 7.5% (4.6%)

Discount for lack ofmarketability

5% to 20% (4.6%)

Unquoted debtsecurities

980 Discountedcash flow

Probability of default 5% to 50% (10%)

Loss severity 40% to 100% (60%)

Investment properties

Commercial 2,380 Marketcomparableapproach

Yield adjustments basedon management’sassumptions*

10% to 25% (13%)

Property, plant andequipment

Freehold land 10,726 Marketcomparableapproach

Yield adjustments basedon management’sassumptions*

15% to 30% (20%)

Buildings 3,574 Marketcomparableapproach

Yield adjustments basedon management’sassumptions*

10% to 20% (15%)

*The yield adjustments are made for any difference in the nature, location or condition ofthe specific property.

For unquoted equity securities, a significant increase (decrease) in the expecteddividend yield would result in a significantly higher (lower) fair value measurement. Asignificant increase (decrease) in discount for lack of marketability would result in asignificantly lower (higher) fair value measurement. A change in assumption used fordividend yield may warrant a directionally opposite change in assumption for discountfor lack of marketability.

For unquoted debt securities, significant increases (decreases) in prepayment rates,probability of default and loss severity in the event of default would result in asignificant lower (higher) fair value measurement. Generally, a change in theassumption used for the probability of default is accompanied by a directionallysimilar change in the assumption used for the loss severity and a directionallyopposite change in the assumption used for prepayment rates.

For contingent consideration, a significant increase (decrease) in the probability ofmeeting the contractual earnings target would result in a significantly higher (lower)fair value measurement.

For freehold land and buildings and commercial investment properties, a significantincrease (decrease) in yield adjustments based on management’s assumptions wouldresult in a significantly lower (higher) fair value measurement.

FRS 113.93.d

FRS 113.93.h.i

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39. Fair value of assets and liabilities (continued)

d) Level 3 fair value measurements (continued)

i) Information about significant unobservable inputs used in Level 3 fair valuemeasurements (continued)

The following table shows the impact on the Level 3 fair value measurement of assetsand liabilities that are sensitive to changes in unobservable inputs that reflectreasonably possible alternative assumptions. The positive and negative effects areapproximately the same.

31 December 2015

Effect of reasonably possiblealternative assumptions

Carryingamount

Profit or loss Othercomprehensive

income

$’000 $’000 $’000

Recurring fair value measurements

Available-for-sale financial assets:

Unquoted equity securities 139 - 15

Unquoted debt securities 1,563 - 56

Contingent consideration for businesscombination (685) 35 -

31 December 2014

Effect of reasonably possiblealternative assumptions

Carryingamount

Profit or loss Othercomprehensive

income

$’000 $’000 $’000

Recurring fair value measurements

Available-for-sale financial assets:

Unquoted equity securities 28 - 10

Unquoted debt securities 980 - 18

In order to determine the effect of the above reasonably possible alternativeassumptions, the Group adjusted the following key unobservable inputs used in thefair value measurement:

- For unquoted equity securities, the Group adjusted the discount for lack ofmarketability by increasing and decreasing the assumptions by 5% to 8% (2014:6% to 9%) depending on the individual characteristics of the instrument.

- For unquoted debt securities, the Group adjusted the probability of default andloss severity assumptions used to calculate the credit valuation adjustment. Theadjustments made were to increase and decrease the assumptions by 6% (2014:5%), which is within the range based on the Group’s internal credit risk assessmentfor the counterparties.

- For contingent consideration for business combination, the Group adjusted theprobability of meeting the contractual earnings target by increasing anddecreasing assumption by 10% (2014: 10%).

FRS 113.93.h.ii

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39. Fair value of assets and liabilities (continued)

d) Level 3 fair value measurements (continued)

ii) Movements in Level 3 assets and liabilities measured at fair value ÊÊ

The following table presents the reconciliation for all assets and liabilities measuredat fair value based on significant unobservable inputs (Level 3):

Group

2015$’000

Fair value measurements using significant unobservable inputs (Level 3)

Available-for-salefinancial assets

Investmentproperties

Contingentconsideration

Total

Unquotedequity

securities

Unquoteddebt

securities

Commercial

Opening balance 28 980 2,380 - 3,388Total gains or losses forthe period

Included in profit or loss - - 350 (235) 115Included in othercomprehensive income 42 28 - - 70

Purchases, issues, salesand settlements

Purchases 103 576 400 - 1,079Sales (34) (21) - - (55)Transfer from/(to)investment properties - - (300) - (300)

Exchange differences - - 1 - 1Arising from acquisition ofsubsidiary - - - (450) (450)Closing balance 139 1,563 2,831 (685) 3,848

Group

2014$’000

Fair value measurements using significant unobservable inputs (Level 3)

Available-for-sale financial assets Investmentproperties

Total

Unquoted equitysecurities

Unquoteddebt

securities

Commercial

Opening balance 40 1,026 2,330 3,396Total gains or losses forthe period

Included in profit or loss - - 50 50Included in othercomprehensive income 15 9 - 24

Purchases, issues, salesand settlements

Purchases 16 15 - 31Sales (43) (70) - (113)

Closing balance 28 980 2,380 3,388

FRS 113.93.e

FRS 113.93.e.i

FRS 113.93.e.ii

FRS 113.93.e.iii

FRS 113.93.e.iv

FRS 113.93.e.i

FRS 113.93.e.ii

FRS 113.93.e.iii

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39. Fair value of assets and liabilities (continued)

d) Level 3 fair value measurements (continued)

ii) Movements in Level 3 assets and liabilities measured at fair value ÊÊ(continued)

The following table presents the reconciliation for all assets and liabilities measuredat fair value based on significant unobservable inputs (Level 3):

Group

2015$’000

Fair value measurements using significant unobservable inputs (Level 3)

Available-for-sale financialassets

Property, plant andequipment

Investmentproperties

Contingentconsideration

Total

Unquotedequity

securities

Unquoteddebt

securities

Freeholdland

Buildings Commercial

Total gains andlosses for the periodincluded in

Profit or loss:- Other income

Net gainfrom fairvalueadjustmentofinvestmentproperties (i) - - - - 350 - 350

- Other expensesFair valueadjustmentof contingentconsiderationof businesscombination(ii) - - - - - (235) (235)

Othercomprehensiveincome:- Net gain on fair

value changesof available-for-sale financialassets 42 28 - - - - 70

- Net surplus onrevaluation ofland andbuildings - - 1,001 249 - - 1250

(i) Relates to net gain from fair value adjustment of investment properties held as at 31 December2015.

(ii) Relates to unrealised loss from fair value adjustment of contingent consideration for businesscombination as at 31 December 2015.

FRS 113.93.e.i

FRS 113.93.e.ii

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39. Fair value of assets and liabilities (continued)

d) Level 3 fair value measurements (continued)

ii) Movements in Level 3 assets and liabilities measured at fair value ÊÊ(continued)

The following table presents the reconciliation for all assets and liabilities measuredat fair value based on significant unobservable inputs (Level 3):

Group

2014$’000

Fair value measurements using significant unobservable inputs (Level 3)

Available-for-salefinancial assets

Property, plant andequipment

Investmentproperties

Contingentconsideration

Total

Unquotedequity

securities

Unquoteddebt

securities

Freeholdland

Buildings Commercial

Total gains andlosses for the periodincluded in

Profit or loss:- Other income

Net gainfrom fairvalueadjustmentofinvestmentproperties (i) - - 50 - 50

Othercomprehensiveincome:- Net gain on fair

value changesof available-for-sale financialassets 15 9 - - - - 24

- Net surplus onrevaluation ofland andbuildings - - 1,784 620 - - 2,404

(i) Relates to net gain from fair value adjustment of investment properties held as at 31 December2014.

FRS 113.93.e.i

FRS 113.93.e.ii

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39. Fair value of assets and liabilities (continued)

d) Level 3 fair value measurements (continued)

iii) Valuation policies and procedures Ï

The Group’s Chief Financial Officer (CFO), who is assisted by the Head of Treasuryand senior controller (collectively referred to as the “CFO office”) oversees theGroup’s financial reporting valuation process and is responsible for setting anddocumenting the Group’s valuation policies and procedures. In this regard, the CFOoffice reports to the Group’s Audit Committee.

For all significant financial reporting valuations using valuation models and significantunobservable inputs, it is the Group’s policy to engage external valuation experts whopossess the relevant credentials and knowledge on the subject of valuation, valuationmethodologies and FRS 113 fair value measurement guidance to perform thevaluation.

For valuations performed by external valuation experts, the appropriateness of thevaluation methodologies and assumptions adopted are reviewed along with theappropriateness and reliability of the inputs (including those developed internally bythe Group) used in the valuations.

In selecting the appropriate valuation models and inputs to be adopted for eachvaluation that uses significant non-observable inputs, external valuation experts arerequested to calibrate the valuation models and inputs to actual market transactions(which may include transactions entered into by the Group with third parties asappropriate) that are relevant to the valuation if such information are reasonablyavailable. For valuations that are sensitive to the unobservable inputs used, externalvaluation experts are required, to the extent practicable to use a minimum of twovaluation approaches to allow for cross-checks.

Significant changes in fair value measurements from period to period are evaluatedfor reasonableness. Key drivers of the changes are identified and assessed forreasonableness against relevant information from independent sources, or internalsources if necessary and appropriate.

The CFO office documents and reports its analysis and results of the externalvaluations to the Audit Committee on a quarterly basis. The Audit Committeeperforms a high-level independent review of the valuation process and results andrecommends if any revisions need to be made before presenting the results to theBoard of Directors for approval.

FRS 113.93.g

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39. Fair value of assets and liabilities (continued)

e) Assets and liabilities not carried at fair value but for which fair value is disclosed Ð

The following table shows an analysis of the Group’s assets and liabilities not measured atfair value but for which fair value is disclosed:

Group

2015$’000

Fair value measurements at the end of the reporting period using

Quotedprices in

activemarkets

foridenticalassets

(Level 1)

Significantobservable

inputs otherthan quoted

prices (Level 2)

Significantunobservable

inputs(Level 3)

TotalCarryingamount

Assets

Government bonds 675 - - 675 660

Investment in associates 10,600 - - 10,600 10,595

Staff loans (non-current) - - 60 60 63

Liabilities:

Deferred cash settlement - - (205) (205) (200)

Financial guarantees - - (29) (29) (26)

Loans and borrowings (non-current)

- Fixed rate bank loans andbonds - - (4,983) (4,983) (4,890)

- Convertible redeemablepreference shares - - (509) (509) (450)

Company

Assets

Amounts and loans due fromsubsidiaries - 13,432 - 13,432 13,563

Staff loans (non-current) - - 49 49 51

Liabilities:

Financial guarantees - - (85) (85) (80)

Loans and borrowings (non-current)

- Fixed rate bank loans andbonds - - (3,162) (3,162) (3,100)

- Convertible redeemablepreference shares - - (509) (509) (450)

FRS 113.97FRS 107.25

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39. Fair value of assets and liabilities (continued)

e) Assets and liabilities not carried at fair value but for which fair value is disclosed Ð(continued)

Group

2014$’000

Fair value measurements at the end of the reporting period using

Quotedprices in

activemarkets

foridenticalassets

(Level 1)

Significantobservable

inputs otherthan quoted

prices (Level 2)

Significantunobservable

inputs(Level 3)

TotalCarryingamount

Assets

Government bonds 665 - - 665 650

Investment in associates 10,400 - - 10,400 10,321

Staff loans (non-current) - - 45 45 48

Liabilities:

Financial guarantees - - (11) (11) (8)

Loans and borrowings (non-current)

- Fixed rate bank loans andbonds - - (5,342) (5,342) (5,240)

- Convertible redeemablepreference shares - - (459) (459) (428)

Company

Assets

Amounts and loans due fromsubsidiaries - 14,161 - 14,161 14,635

Staff loans (non-current) - - 34 34 36

Liabilities:

Financial guarantees - - (105) (105) (100)

Loans and borrowings (non-current)

- Fixed rate bank loans andbonds - - (3,060) (3,060) (3,000)

- Convertible redeemablepreference shares - - (459) (459) (428)

Determination of fair value

Amounts and loans due from subsidiaries, Staff loans, Deferred cash, Fixed rate bank loansand bonds, and Convertible redeemable preference shares

The fair values as disclosed in the table above are estimated by discounting expectedfuture cash flows at market incremental lending rate for similar types of lending,borrowing or leasing arrangements at the end of the reporting period.

FRS 113.97FRS 107.25

FRS 113.97

FRS 113.93.d

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39. Fair value of assets and liabilities (continued)

f) Fair value of financial instruments by classes that are not carried at fair valueand whose carrying amounts are not reasonable approximation of fair value

The fair value of financial assets and liabilities by classes that are not carried at fairvalue and whose carrying amounts are not reasonable approximation of fair value areas follows:�

Group Company

Note 2015

$’000

2014

$’000

2015

$’000

2014

$’000

Carryingamount

Fairvalue

Carryingamount

Fairvalue

Carryingamount

Fairvalue

Carryingamount

Fairvalue

Financial assets:

Government bonds 22 660 675 650 665 – – – –

Equity securities, atcost 22 500 T 600 T – – – –

Amounts and loans duefrom subsidiaries 21 – – – – 13,972 13,432 14,635 14,161

Staff loans (non-current) 21 63 60 48 45 51 49 36 34

Financial liabilities:

Deferred cashsettlement 31 (200) (205) – – – – – –

Financial guarantee 32 (26) (29) (8) (11) (80) (85) (100) (105)

Loans and borrowings(non-current) 30

- Obligations underfinance leases (720) (769) (160) (169) – – – –

- Fixed rate bankloans and bonds (4,890) (4,983) (5,240) (5,342) (3,100) (3,162) (3,000) (3,060)

- Convertibleredeemablepreference shares (450) (509) (428) (459) (450) (509) (428) (459)

T Investment in equity securities carried at cost

Fair value information has not been disclosed for the Group’s investments in equitysecurities that are carried at cost because fair value cannot be measured reliably.These equity securities represent ordinary shares in an Israeli high-technologycompany that is not quoted on any market and does not have any comparable industrypeer that is listed. In addition, the variability in the range of reasonable fair valueestimates derived from valuation techniques is significant. The Group does not intendto dispose of this investment in the foreseeable future. The Group intends to eventuallydispose of this investment through sale to institutional investors.�

FRS 107.7 and 31FRS 107.25,26 and29

FRS 107.30.a-d

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39. Fair value of assets and liabilities (continued)

Commentary:

Ê Disclosures in tabular format

An entity shall present the quantitative disclosures required by FRS 113 in a tabular formatunless another format is more appropriate.

Ë In this illustration, the current use of the non-financial assets does not differ from their highestand best use. If for recurring and non-recurring fair value measurements, the highest and bestuse of a non-financial asset differs from its current use, an entity shall disclose the fact andwhy the non-financial asset is being used in a manner that differs from its highest and best use.

Ì In this illustration, the Group’s commercial properties are categorised within Level 3 of the fairvalue hierarchy as the properties’ fair values are determined based on comparable markettransactions adjusted for significant unobservable inputs such as yield adjustments relating tonature, location and condition of the specific property.

In this illustration, the Group’s residential investment properties are categorised within Level 2of the fair value hierarchy as the properties’ fair values are determined solely based onobservable inputs other than quoted prices.

Í In this illustration, the Group does not have any liability measured at fair value and issued withan inseparable third-party credit enhancement.

For a liability measured at fair value and issued with an inseparable third-party creditenhancement, an issuer shall disclose the existence of that credit enhancement and whether itis reflected in the fair value measurement of the liability.

FRS 113.99

FRS 113.94

FRS 113.93.i

FRS 113.98

Classes of assets and liabilities

An entity shall determine appropriate classes of assets and liabilities on the basis of thefollowing:

(a) The nature, characteristics and risks of the asset or liability; and

(b) The level of the fair value hierarchy within which the fair value measurement iscategorised.

The number of classes may need to be greater for fair value measurements categorisedwithin Level 3 of the fair value hierarchy because those measurements have a greaterdegree of uncertainty and subjectivity. Determining appropriate classes of assets andliabilities for which disclosures about fair value measurements should be providedrequires judgement. A class of assets and liabilities will often require greaterdisaggregation than the line items presented in the balance sheet. If another FRSspecifies the class for an asset or a liability, an entity may use that class in providing thedisclosures required in FRS 113 if that class meets the requirements in this paragraph.

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39. Fair value of assets and liabilities (continued)

Commentary (continued):

� In this illustration, there has been no change in valuation technique for recurring and non-recurring fair value measurements categorised within Level 2 and Level 3 of the fair valuehierarchy. If there has been a change in valuation technique (e.g. changing from a marketapproach to an income approach or use of an additional valuation technique), the entity shalldisclose that change and the reason(s) for making it.

� For recurring and non-recurring fair value measurements categorised within Level 3 of the fairvalue hierarchy, a description of valuation processes used by the entity (including, forexample, how an entity decides its valuation policies and procedures and analyses changes infair value measurements from period to period.

An entity might disclose the following:

(a) for the group within the entity that decides the entity’s valuation policies andprocedures:

i. its description;

ii. to whom that group reports; and

iii. the internal reporting procedures in place (e.g. whether and, if so, how pricing, riskmanagement or audit committees discuss and assess the fair value measurements.

(b) the frequency and methods for calibration, back testing and other testing procedures ofpricing models;

(c) the process for analysing changes in fair value measurements from period to period;

(d) how the entity determined that third-party information, such as broker quotes or pricingservices, used in the fair value measurement was developed in accordance with FRS 113;and

(e) the methods used to develop and substantiate the unobservable inputs used in a fairvalue measurement.

� In this illustration, investment properties are carried at fair value. For any investmentproperties recorded at cost, FRS 40 requires disclosure about fair value. Please refer tocommentary no.2 of Note 2.8 Investment properties.

Where investment properties are carried at cost for which fair value are disclosed, FRS 113.97requires the disclosures of

- the level of the fair value hierarchy within which the fair value measurements arecategorised in their entirety (Level 1, 2 or 3),

- a description of the valuation technique(s) and inputs used in the fair value measurement.If there has been a change in valuation technique, the entity shall disclose the reason formaking it,

- the fact and why the non-financial asset is being used in a manner that differs from itshighest and best use if the highest and best use of a non-financial asset differs from itscurrent use

FRS 113.93.d

FRS 113.93.g

FRS 113.IE65

FRS 113.97

FRS 113.93.b

FRS 113.93.d

FRS 113.93.i

It is important to note that the illustration on valuation policies and procedures forrecurring and non-recurring fair value measurements categorised within Level 3 of thefair value hierarchy is based on certain assumed facts regarding circumstancessurrounding XYZ Holdings (Singapore) Limited. The valuation policies and proceduresof other entities may be different and disclosures would have to be customised in thelight of specific facts and circumstances applicable to the entity.

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39. Fair value of assets and liabilities (continued)

Commentary (continued):

Fair value of financial assets and liabilities

� FRS 107.25 requires the fair value of each class of financial assets and liabilities to bedisclosed in a way that permits it to be compared with its carrying amount. However,disclosures of fair value are not required:

- When the carrying amount is a reasonable approximation of fair value (e.g., short-termtrade and other receivables and payables, and long-term loans that are re-priced to marketrate);

- For an investment in equity instrument that do not have a quoted market price in an activemarket, or derivatives linked to such equity instruments, that is measured at cost inaccordance with FRS 39 because its fair value cannot be measured reliably; or

- For a contract containing a discretionary participation feature (as described in FRS 104) ifthe fair value of that feature cannot be measured reliably.

In this illustration, in addition to the above exemptions, the comparison between carryingamount and fair value of financial assets or liabilities that are carried at fair value (e.g., held fortrading investments and derivatives) has not been disclosed as these assets are carried at fairvalue.

Financial instruments whose fair value cannot be reliably measured

� FRS 107 requires the disclosure of fair value information for financial instruments whose fairvalue cannot be reliably measured to include disclosure of whether and how the entity intendsto dispose of such financial instruments.

If financial instruments whose fair value previously could not be reliably measured arederecognised, that fact, their carrying amounts at the time of de-recognition, and the amountof gain or loss recognised shall be disclosed.

FRS 107.25 and 29

FRS 107.20.d

FRS 107.30.e

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39. Fair value of assets and liabilities (continued)

Additional illustrative disclosures:

Ê Transfers between fair value hierarchy

Transfers between Level 1 and Level 2

FRS 113 requires disclosures of the amount of any transfers between Level 1 and Level 2 ofthe fair value hierarchy for assets and liabilities held at the end of the reporting period thatare measured at fair value on a recurring basis and the reasons for those transfers. Transfersinto each level shall be disclosed and discussed separately from transfers out of each level.

In this illustration, there were no assets or liabilities transferred between Level 1 and Level 2.

Illustrative disclosure if an entity has transfers of assets or liabilities between Level 1 andLevel 2.

The following table shows transfers from Level 1 to Level 2 of the fair value hierarchyfor assets and liabilities which are recorded at fair value.

The above financial assets were transferred from Level 1 to Level 2 as they weredelisted from the stock exchange and therefore ceased to be actively traded during theyear and fair values were consequently measured using valuation techniques and usingobservable market inputs.

Group2014$’000

Financial assets held-for-trading - Quoted equity securities XXXFinancial investments available-for-sale - Other debt securities XXX

Transfers into or out of Level 3

FRS 113 requires disclosures of the amount of any transfers into or out of Level 3 of the fairvalue hierarchy, the reasons for those transfers and the entity’s policy for determining whentransfers between levels are deemed to have occurred. Transfers into Level 3 shall bedisclosed and discussed separately from transfers out of Level 3.

In this illustration, there were no assets or liabilities transferred from Level 1 and Level 2 toLevel 3.

Illustrative disclosure if there were transfers of assets or liabilities into Level 3.

During the financial year ended 31 December 2015, the Group transferred certainfinancial instruments from Level 2 to Level 3 of the fair value hierarchy. The carryingamount of the total financial assets transferred was $XXX.

The reason for the transfers from Level 2 to Level 3 is that inputs to the valuationmodels for the other debt securities ceased to be observable. Prior to transfer, the fairvalue of the instruments was determined using observable market transactions orbinding broker quotes for the same or similar instruments. Since the transfer, theseinstruments have been valued using valuation models incorporating significant nonmarket-observable inputs.

Illustrative disclosure if there were transfers of assets or liabilities out of Level 3.

The Group transferred an unquoted equity security from Level 3 to Level 1 of the fairvalue hierarchy. The carrying amount of the total financial assets transferred was$XXX.

The security was transferred from Level 3 into Level 1 as it was listed on the stockexchange during the financial year. Prior to the transfer, the fair value of the securitywas determined using valuation model incorporating significant non market-observableinputs. Since the transfer, the fair value of the security is determined based on marketprice quoted in the stock exchange.

FRS 113.93.c

FRS 113.93.e.iv

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40. Financial risk management objectives and policies ÊËÌÍ

The Group and the Company is exposed to financial risks arising from its operations andthe use of financial instruments. The key financial risks include credit risk, liquidity risk,interest rate risk, foreign currency risk and market price risk. The board of directorsreviews and agrees policies and procedures for the management of these risks, which areexecuted by the Chief Financial Officer, Head of Treasury and Head of Credit Control. TheAudit Committee provides independent oversight to the effectiveness of the riskmanagement process. It is, and has been throughout the current and previous financialyear, the Group’s policy that no trading in derivatives for speculative purposes shall beundertaken. Ê

The following sections provide details regarding the Group’s and Company’s exposure tothe above-mentioned financial risks and the objectives, policies and processes for themanagement of these risks.

Commentary:

Nature and extent of risks arising from financial instruments

Ê FRS 107 requires an entity to disclose qualitative and quantitative information that enablesusers of its financial statements to evaluate the nature and extent of risks arising fromfinancial instruments to which the entity is exposed at the reporting date, including theentity’s policies and processes for accepting, measuring, monitoring and controlling suchrisks. In addition, an entity is required to disclose any change in the qualitative informationfrom the previous period and explain the reasons for the change.

The disclosures in response to FRS 107 illustrated in this note are based on assumedcircumstances of XYZ Holdings (Singapore) Limited and may not be applicable orrelevant to other entities. Each entity should customise the information disclosedaccording to the specific circumstances, financial risk exposures, and risk managementpolicies and procedures relevant to the entity.

Alternative approaches of disclosure

Ë Decentralised disclosures

In this illustration, most of the information regarding the nature and extent of risks arisingfrom financial instruments required by FRS 107.31-42, has been disclosed in one centralisednote. Alternatively, an entity may disclose such information in the respective balance sheetitem notes where appropriate.

Ì Incorporating disclosures by cross reference

The disclosures of information regarding the nature and extent of risks arising from financialinstruments may instead be incorporated in the financial statements by cross-reference fromthe financial statements to some other statement, such as management commentary or riskreport, that is available to users of the financial statements on the same terms as the financialstatements and at the same time. Without the information incorporated by cross-reference,the financial statements are incomplete.

Í In this illustration, there’s no change to the Group’s exposure to risk arising from financialinstruments. FRS 107 requires disclosures of changes from previous period for(a) exposures to risk and how they arise; (or)(b) its objective, policies and processes for managing the risk and the methods used to

measure the risks from the previous period.

FRS 107.7 and 31

FRS 107.31-33and IG15

FRS 107.AGB6

FRS 107.33.c

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40. Financial risk management objectives and policies (continued)

Additional illustrative disclosures:

Alternative simplified disclosures

Ê In this illustration, the entity is exposed to all credit risk, liquidity risk, interest rate risk,foreign currency risk and market price risk.

Example illustrative financial risk management objectives and policies for a non-complextrading entity which is exposed mainly to credit risk and liquidity risk.

The Group and the Company is exposed to financial risks arising from its operations and theuse of financial instruments. The key financial risks include credit risk and liquidity risk.

The following sections provide details regarding the Group and Company's exposure to theabove-mentioned financial risks and the objectives, policies and processes for themanagement of these risks.

a) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments shoulda counterparty default on its obligations. The Group’s and the Company’s exposure tocredit risk arises primarily from trade and other receivables. For other financial assets(including investment securities, cash and short-term deposits and derivatives), theGroup and the Company minimise credit risk by dealing exclusively with high creditrating counterparties.

The Group’s objective is to seek continual revenue growth while minimising lossesincurred due to increased credit risk exposure. The Group trades only with recognisedand creditworthy third parties. It is the Group’s policy that all customers who wish totrade on credit terms are subject to credit verification procedures. In addition,receivable balances are monitored on an ongoing basis with the result that the Group’sexposure to bad debts is not significant. For transactions that do not occur in thecountry of the relevant operating unit, the Group does not offer credit terms withoutthe approval of the Head of Credit Control.

Excessive risk concentration

Concentrations arise when a number of counterparties are engaged in similar businessactivities, or activities in the same geographical region, or have economic features thatwould cause their ability to meet contractual obligations to be similarly affected bychanges in economic, political or other conditions. Concentrations indicate the relativesensitivity of the Group’s performance to developments affecting a particular industry.

In order to avoid excessive concentrations of risk, the Group’s policies and proceduresinclude specific guidelines to focus on maintaining a diversified portfolio. Identifiedconcentrations of credit risks are controlled and managed accordingly. Selectivehedging is used within the Group to manage risk concentrations at both the relationshipand industry levels. The Group does not apply hedge accounting.

Exposure to credit risk ÊË

At the end of the reporting period, the Group’s and the Company’s maximum exposureto credit risk is represented by:

- A nominal amount of $565,000 (2014: $255,000) relating to a corporateguarantee provided by the Group to the banks on associates’ and joint venture’sloans

- A nominal amount of $5,400,000 (2014: $5,400,000) relating to a corporateguarantee provided by the Company to a bank on a subsidiary’s bank loan

Information regarding credit enhancements for trade and other receivables is disclosedin Note 21.

FRS 107.31, 33 andIG17

FRS 107.33.a-b andIG15

FRS 107.33.a-bFRS 107.IG15.c

FRS 107 AGB9-B10

FRS 107.36.b

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40. Financial risk management objectives and policies (continued)

a) Credit risk (continued)

Credit risk concentration profile Ì

The Group determines concentrations of credit risk by monitoring the country andindustry sector profile Í of its trade receivables on an ongoing basis. The credit riskconcentration profile of the Group’s trade receivables at the end of the reportingperiod is as follows:

Group

2015 2014

$’000 % of total $’000 % of total

By country:

Singapore 10,019 46% 12,950 53%

People’s Republic of China 4,989 23% 4,995 21%

Malaysia 3,467 16% 3,442 14%

Vietnam 1,981 9% 1,619 7%

Other countries 1,238 6% 1,185 5%

21,694 100% 24,191 100%

By industry sectors:

Multi-industry conglomerates 8,590 39% 9,989 41%

Electronics 7,539 35% 7,496 31%

Property 4,719 22% 5,883 24%

Others 846 4% 823 4%

21,694 100% 24,191 100%

At the end of the reporting period, approximately:

- 21% (2014: 19%) of the Group’s trade receivables were due from 5 majorcustomers who are multi-industry conglomerates located in Singapore.

- 11% (2014: 9%) of the Group’s trade and other receivables were due from relatedparties while almost all of the Company’s receivables were balances with relatedparties.

Financial assets that are neither past due nor impaired

Trade and other receivables that are neither past due nor impaired are withcreditworthy debtors with good payment record with the Group. Cash and short-termdeposits, investment securities and derivatives that are neither past due nor impairedare placed with or entered into with reputable financial institutions or companies withhigh credit ratings and no history of default.

Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is disclosedin Note 21 (Trade and other receivables) and Note 22 (Investment securities).

FRS 107.34.aand AGB8

FRS 107.34.a,34.c and AGB8

FRS 107.36.c

FRS 107.37

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40. Financial risk management objectives and policies (continued)

a) Credit risk (continued)

Commentary:

Credit risk relating to financial assets or financial liabilities at fair value through profit or loss

Ê In this illustration, no financial instrument has been designated as financial assets or financialliabilities at fair value through profit or loss. If an entity has designated a loan or receivable orfinancial liability as at fair value through profit or loss, FRS 107 requires further disclosuresregarding the maximum credit risk exposures of such receivables and the amount by whichany related credit derivatives or similar instruments mitigate that credit risk exposure;changes in fair value during the period and cumulatively, of such loan or receivable or financialliabilities that is attributable to changes in credit risk (including the methods of determiningsuch fair value changes) and of any related credit derivatives or similar instruments; and thedifference between the financial liability’s carrying amount and the contractual repaymentamount.

Disclosure of maximum exposure to credit risk

Ë For financial instruments where the carrying amount best represents the maximum exposureto credit risk, the disclosure of the maximum exposure to credit risk is not required.

Quantitative disclosures

Ì FRS 107 requires the disclosure of summary quantitative data about an entity’s exposure tofinancial risk (e.g., credit risk, liquidity risk and market risk) that is based on the informationprovided internally to key management personnel of the entity (as defined in FRS 24, RelatedParty Disclosures), e.g., the board of directors or CEO. As such, the disclosures would bedefined by the actual information used by management in managing financial risks, which maybe different from those disclosed in this illustration.

In addition, if the above-mentioned quantitative data disclosed as at the end of the reportingperiod are unrepresentative of the entity’s exposure to risk during the period, the entity shallprovide further information that is representative e.g., an entity might disclosed the highest,lowest and average amount of risk to which it was exposed during the period to meet thedisclosure requirement.

Í The identification of concentrations of credit risk requires judgement taking into account thecircumstances of the entity. Apart from country and industry sectors, other measures ofcredit risk concentrations may include credit rating or other measures of credit quality, limitednumber of individual counterparties, or groups of closely related counterparties.

FRS 107.9-11

FRS 107.36.a

FRS 107.34.a

FRS 107.35 andIG20

FRS 107.AGB8 andIG18

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40. Financial risk management objectives and policies (continued)

b) Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter difficulty inmeeting financial obligations due to shortage of funds. The Group’s and the Company’sexposure to liquidity risk arises primarily from mismatches of the maturities of financialassets and liabilities. The Group’s and the Company’s objective is to maintain a balancebetween continuity of funding and flexibility through the use of stand-by creditfacilities.

The Group’s and the Company’s liquidity risk management policy is that not more than20% (2014: 20%) of loans and borrowings (including overdrafts and convertibleredeemable preference shares) should mature in the next one year period, and that tomaintain sufficient liquid financial assets and stand-by credit facilities with threedifferent banks. At the end of the reporting period, approximately 8% (2014: 15%) ofthe Group’s loans and borrowings will mature in less than one year based on thecarrying amount reflected in the financial statements, excluding discontinuedoperation. None (2014: none) of the Company’s loans and borrowings will mature inless than one year at the end of the reporting period. Ê�

The Group assessed the concentration of risk with respect to refinancing its debt andconcluded it to be low. Access to sources of funding is sufficiently available and debtmaturing within 12 months can be rolled over with existing lenders.

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s and the Company’sfinancial assets and liabilities at the end of the reporting period based on contractualundiscounted repayment obligations.�

2015$’000

2014$’000

Group

One year orless�

One tofive

yearsOver five

years TotalOne yearor less�

One tofive years

Over fiveyears Total

Financial assets:�

Trade and otherreceivables 24,921 2,984 – 27,905 26,936 2,980 – 29,916

Cash and short-termdeposits 6,117 – – 6,117 4,858 – – 4,858

Derivatives� 170 – – 170 105 – – 105

Total undiscountedfinancial assets 31,208 2,984 – 34,192 31,899 2,980 – 34,879

Financial liabilities:

Trade and other payables 17,517 250 – 17,767 19,140 – – 19,140

Other liabilities 2,974 – – 2,974 2,579 – – 2,579

Loans and borrowings 1,189 12,817 4,275 18,281 2,290 12,659 3,277 18,226

Contingent considerationfor business combination 685 – – 685 – – – –

Derivatives� 22 – – 22 – – – –

Total undiscountedfinancial liabilities 22,387 13,067 4,275 39,729 24,009 12,659 3,277 39,945

Total net undiscountedfinancial assets/(liabilities) 8,821 (10,083) (4,275) (5,537) 7,890 (9,679) (3,277) (5,066)

FRS 107.33.a-b,39.c and IG5

FRS 107.33.b, 39.cand AGB11F.e

FRS 107.AGB11F.aand c

FRS 107.34.a, 34.cand AGB8

FRS 107.39.a, b andAGB11D

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40. Financial risk management objectives and policies (continued)

b) Liquidity risk (continued)

2015$’000

2014$’000

Company

One year orless�

One tofive years

Over fiveyears Total

One yearor less�

One tofive years

Over fiveyears Total

Financial assets:�

Trade and otherreceivables 338 17,289 – 17,627 350 17,855 – 18,205

Cash and short-termdeposits 4,621 – 4,621 4,145 – – 4,145

Total undiscountedfinancial assets 4,959 17,289 – 22,248 4,495 17,855 – 22,350

Financial liabilities:

Trade and other payables 470 – – 470 414 – – 414

Other liabilities 481 – – 481 446 – – 446

Loans and borrowings – 4,682 2,084 6,766 – 3,796 2,540 6,336

Total undiscountedfinancial liabilities 951 4,682 2,084 7,717 860 3,796 2,540 7,196

Total net undiscountedfinancial assets/(liabilities) 4,008 12,607 (2,084) 14,531 3,635 14,059 (2,540) 15,154

The table below shows the contractual expiry by maturity of the Group and Company’scontingent liabilities and commitments. The maximum amount of the financialguarantee contracts are allocated to the earliest period in which the guarantee couldbe called.�

2015$’000

2014$’000

One year orless�

One tofive

yearsOver five

years TotalOne yearor less�

One tofive years

Over fiveyears Total

Group

Financial guarantees 320 245 – 565 15 240 – 255

Company

Financial guarantees – 5,400 – 5,400 – 5,400 – 5,400

FRS 107.AGB11C.c

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40. Financial risk management objectives and policies (continued)

b) Liquidity risk (continued)

Commentary:

Quantitative disclosures

Ê Please refer to commentary no. 3 of Note 40(a) (Credit risk)

Other factors to consider in disclosing liquidity risk

� The application guidance in FRS 107 illustrates the other factors that an entity might alsoconsider disclosing which include, but are not limited to, whether the entity:

(a) has committed borrowing facilities (e.g., commercial paper facilities) or other lines ofcredit (e.g., stand-by credit facilities) that it can access to meet liquidity needs;

(b) holds deposits at central banks to meet liquidity needs;

(c) has very diverse funding sources;

(d) has significant concentrations of liquidity risk in either its assets or its funding sources;

(e) has internal control processes and contingency plans for managing liquidity risk;

(f) has instruments that include accelerated repayment terms (e.g., on the downgrade ofthe entity’s credit rating);

(g) has instruments that could require the posting of collateral (e.g., margin calls forderivatives);

(h) has instruments that allows the entity to choose whether it settles its financial liabilitiesby delivering cash (or another financial asset) or by delivering its own shares; or

(i) has instruments that are subject to master netting agreements.

Maturity analysis for financial liabilities

� In this illustration, certain undiscounted payments presented differ from the carrying amountincluded in the balance sheet because the balance sheet amounts are based on discountedcash flows.

When the amount payable is not fixed, the maturity analysis is determined by reference to theconditions existing at the reporting date. For example, when the amount payable varies withchanges in an index, the amount disclosed may be based on the level of the index at thereporting date.

� The number of time bands illustrated is only an example. An entity should use its judgementto determine the number of time bands that is suitable for the entity.

When the counterparty has a choice of when an amount is paid, the liability is included on thebasis of the earliest date on which the entity can be required to pay. For example, financialliabilities that the entity can be required to repay on demand are included in the earliest timeband.

FRS 107.AGB11F

FRS 107.AGB11D

FRS 107.AGB11

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40. Financial risk management objectives and policies (continued)

b) Liquidity risk (continued)

Commentary (continued):

Maturities of financial assets held for liquidity purposes

� FRS 107.39.c requires an entity to describe how it manages the liquidity risk inherent in theitems disclosed in the quantitative disclosures required in FRS 107.39.a and b. If financialassets are readily saleable or expected to generate cash inflows to meet cash outflows onfinancial liabilities and if that information is necessary to enable users of its financialstatements to evaluate the nature and extent of liquidation risk. An entity shall disclose amaturity analysis of financial assets it holds for managing liquidity risks.

Quantitative liquidity risk disclosures

� FRS 107 specifies minimum liquidity risk disclosures, i.e., the contractual maturity analysis offinancial liabilities, required by FRS 107.39.

FRS 107 permits derivative liabilities to be excluded from the paragraph 39 maturity analysis,unless the “contractual maturities are essential for an understanding of the timing of the cashflows”. The application guidance cites an interest rate swap designated in a cash flow hedgingrelationship as an example of such an essential case. Given that the hedged cash flows arerequired to be highly probable, the swap would normally be expected to be held to maturity.For those derivatives included in the contractual maturity analysis, the guidance still requiresgross cash flows to be disclosed for those derivatives which will involve a gross exchange ofcash flows, such as currency swaps.�

Financial guarantees issued

� FRS 107 requires issued financial guarantee contracts to be recorded in the contractualmaturity analysis based on the maximum amount guaranteed. They are to be allocated to theearliest date they can be drawn down, irrespective of whether it is likely that thoseguarantees will be drawn or the amount that is expected to be paid.

Additional illustrative disclosures:

Quantitative liquidity risk disclosures

� Illustrative disclosure for gross cash flows for those derivatives which will involve grossexchange of cash flows, such as currency swaps.

Below is an illustration of such a presentation:

Group$’000

One yearor less

One tofive years

Over fiveyears

Total

Derivatives:

- Interest rate swaps – settled net XXX – – XXX

- Forward currency contracts – gross payments XXX – – XXX

- Forward currency contracts – gross receipts (XXX) – – (XXX)

FRS 107.AGB11E

FRS 107.AGB11B

FRS 107.AGB11D

FRS 107.AGB11C.c

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40. Financial risk management objectives and policies (continued)

c) Interest rate risk Ê

Interest rate risk is the risk that the fair value or future cash flows of the Group’s andthe Company’s financial instruments will fluctuate because of changes in marketinterest rates. The Group’s and the Company’s exposure to interest rate risk arisesprimarily from their loans and borrowings, interest-bearing loans given to relatedparties and investments in debt securities. The Group does not hedge its investment infixed rate debt securities as they have active secondary or resale markets to ensureliquidity. The Company’s loans at floating rate given to related parties form a naturalhedge for its non-current floating rate bank loan. All of the Group’s and the Company’sfinancial assets and liabilities at floating rates are contractually re-priced at intervals ofless than 6 months (2014: less than 6 months) from the end of the reporting period.

The Group’s policy is to manage interest cost using a mix of fixed and floating ratedebts. The Group’s policy is to keep 40% to 70% (2014: 40% to 70%) of its loans andborrowings at fixed rates of interest. To manage this mix in a cost-efficient manner, theGroup enters into interest rate swaps. At the end of the reporting period, after takinginto account the effect of an interest rate swap, approximately 62% (2014: 58%) of theGroup’s borrowings are at fixed rates of interest. Ë

Sensitivity analysis for interest rate risk Ì

At the end of the reporting period, if SGD interest rates Ê had been 75 (2014: 75)basis points lower/higher with all other variables held constant, the Group’s profitbefore tax would have been $20,000 (2014: $18,000) higher/lower, arising mainly asa result of lower/higher interest expense on floating rate loans and borrowings,lower/higher interest income from floating rate loans to related parties andlower/higher positive fair value of an interest rate swap, and the Group’s other reservein other comprehensive income would have been $30,000 (2014: $30,000)higher/lower, arising mainly as a result of an increase/decrease in the fair value offixed rate debt securities classified as available-for-sale. The assumed movement inbasis points for interest rate sensitivity analysis is based on the currently observablemarket environment, showing a significantly higher volatility as in prior years.

FRS 107.33.a- band IG16

FRS 107.33.band 34.a

FRS 107.40,IG36 and AGB18

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40. Financial risk management objectives and policies (continued)

c) Interest rate risk Ê (continued)

Commentary:

Sources of interest rate risk

Ê Interest rate risk arises on interest-bearing financial instruments recognised in the balancesheet (e.g., loans and receivables and debt instruments issued) and on some financialinstruments not recognised in the balance sheet (e.g., some loan commitments).

Quantitative disclosures

Ë Please refer to commentary no. 3 of Note 40(a) (Credit risk)

Sensitivity analysis for market risk

Ì FRS 107 requires disclosure of sensitivity analysis for each type of market risk to which anentity is exposed at the reporting date, showing how profit or loss and equity would have beenaffected by changes in the relevant risk variable that were reasonably possible at that date.These analyses shall be provided for the whole of an entity’s business. However, an entity mayalso “drill down” to provide different types of sensitivity analysis for different classes offinancial instruments.

The sensitivity analysis should be based on changes in the risk variable that were reasonablypossible at the reporting date having considered the economic environments in which theentity operates, the type of market risk concerned and the time frame over which theassessment is being made i.e., the period until the entity will next present the analysis e.g.,next annual reporting period. A reasonably possible change should not include remote or“worst case” scenarios or “stress test”.

An entity should also disclose the methods and assumptions used in preparing the sensitivityanalysis, and changes from the previous period in the methods and assumptions used,including the reasons for such changes.

Instead of the sensitivity analysis illustrated, FRS 107 permits an entity to use a sensitivityanalysis that reflects interdependencies between risk variables, such as a value-at-riskmethodology, if it uses this analysis to manage its exposure to financial risks. This applieseven if such a methodology measures only the potential for loss and does not measure thepotential for gain. In such cases, the entity should also disclose an explanation of the methodand objective of the analysis (e.g., whether the model relies on Monte Carlo simulations), themain parameters and assumptions used (e.g., the holding period and confidence level), andlimitations that may result in the information disclosed not fully reflecting the fair value ofassets and liabilities involved.

When the sensitivity analyses disclosed are unrepresentative of a risk inherent in a financialinstrument (e.g., because the end of the reporting period exposure does not reflect exposureduring the financial year), the entity shall disclose that fact and the reason it believes thesensitivity analyses are unrepresentative, including additional disclosures regarding the riskinherent in that financial instrument.

In this illustration, company-level sensitivity analysis has not been disclosed becauseaccording to the assumed scenario, XYZ Holdings (Singapore) Limited is an investment holdingcompany with no significant net exposure to market price risk. If this is not the case, the entityshould provide company-level disclosures as appropriate.

FRS 107.AGB22

FRS 107.40.a

FRS 107.AGB21

FRS 107.AGB19 andIG35

FRS 107.40.b and c

FRS 107.41 andAGB20

FRS 107.42 andIG37-40

FRS 107.34.b

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40. Financial risk management objectives and policies (continued)

c) Interest rate risk Ê (continued)

Additional illustrative disclosures:

Sensitivity analysis for interest rate risk

Ê In this illustration, the interest rate risk sensitivity analysis has been performed for the effect ofa change in SGD interest rates because it is relevant to the interest rate risk exposure of XYZHoldings (Singapore) Limited. An entity might disclose a sensitivity analysis for interest raterisk for each currency in which the entity has material exposure to interest rate risk.

Illustrative tabular disclosure of interest rate risk sensitivity analysis where more than onecurrency is involved:

The table below demonstrates the sensitivity to a reasonably possible change in interestrates with all other variables held constant, of the Group’s profit before tax (through theimpact on interest expense on floating rate loans and borrowings) and the Group’s equity(through the impact on other reserves for fixed rate debt securities classified as available-for-sale).

Group$’000

Increase/decrease inbasis points

Effect on profitbefore tax

Effect onequity

2015- Singapore dollar +15 (XX) (XX)

- US dollar +20 (XX) (XX)

- Singapore dollar -10 XX XX

- US dollar -15 XX XX

2014

- Singapore dollar +15 (XX) (XX)

- US dollar +20 (XX) (XX)

- Singapore dollar -10 XX XX

- US dollar -15 XX XX

FRS 107.IG34

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40. Financial risk management objectives and policies (continued)

d) Foreign currency risk Ê

The Group has transactional currency exposures arising from sales or purchases thatare denominated in a currency other than the respective functional currencies of Groupentities, primarily SGD, Malaysian Ringgit (Ringgit) and Renminbi (RMB). The foreigncurrencies in which these transactions are denominated are mainly United StatesDollars (USD). Approximately 23% (2014: 25%) of the Group’s sales are denominated inforeign currencies whilst almost 80% (2014: 83%) of costs are denominated in therespective functional currencies of the Group entities. The Group’s trade receivable andtrade payable balances at the end of the reporting period have similar exposures.

The Group and the Company also hold cash and short-term deposits denominated inforeign currencies for working capital purposes. At the end of the reporting period,such foreign currency balances are mainly in USD.�

The Group requires all of its operating entities to use forward currency contracts toeliminate the currency exposures on any individual transactions in excess of $100,000for which payment is anticipated more than one month after the Group has enteredinto a firm commitment for a sale or purchase. The forward currency contracts must bein the same currency as the hedged item. It is the Group’s policy not to enter intoforward contracts until a firm commitment is in place. It is the Group’s policy tonegotiate the terms of the forward currency contracts to match the terms of the firmcommitment to maximise hedge effectiveness.

At 31 December 2015, the Group had hedged 75% (2014: 68%) and 70% (2014: 65%)of its foreign currency denominated sales and purchases respectively, for which firmcommitments existed at the end of the reporting period, extending to March 2015(2014: March 2015).� The Group does not apply hedge accounting for such foreigncurrency denominated sales and purchases.

The Group is also exposed to currency translation risk � arising from its netinvestments in foreign operations, including Malaysia, People’s Republic of China (PRC)and Vietnam. The Group’s investment in its Vietnam subsidiary is hedged by a USDdenominated bank loan, which mitigates structural currency exposure arising from thesubsidiary’s net assets. The Group’s net investments in Malaysia and PRC are nothedged as currency positions in Ringgit and RMB are considered to be long-term innature.

Sensitivity analysis for foreign currency risk�

The following table demonstrates the sensitivity of the Group’s profit before tax to areasonably possible change in the USD, RMB and Ringgit exchange rates against therespective functional currencies of the Group entities, with all other variables heldconstant.�

Group

2015$’000

2014$’000

Profit before tax Profit before taxUSD/SGD - strengthened 3% (2014: 3%) –30 –30

- weakened 3% (2014: 3%) +28 +28

USD/RMB - strengthened 4% (2014: 4%) –15 –12

- weakened 4% (2014: 4%) +15 +12

RMB/SGD - strengthened 4% (2014: 4%) +57 +66

- weakened 4% (2014: 4%) –57 –66

Ringgit/SGD - strengthened 3% (2014: 4%) +40 +68

- weakened 3% (2014: 4%) –40 –68

FRS 107.33.aand 34.a

FRS 107.33.aand 34.a

FRS 107.33.b

FRS 107.34.a

FRS 107.40 andAGB18

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Notes to the financial statementsFor the financial year ended 31 December 2015

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40. Financial risk management objectives and policies (continued)

d) Foreign currency risk Ê (continued)

Commentary:

Disclosure of amounts denominated in foreign currencies

Ê The disclosure of exposures to foreign currency amounts is required under the disclosureprinciples of FRS 107.31 (nature and extent of risks) as well as the specific requirement in FRS107.34 to disclose summary quantitative data about the entity's exposure to risks (includingforeign currency risks) arising from financial instruments. In this illustration, most of theinformation regarding foreign currency risk exposures is presented in Note 40(d), Note 21,Note 27 and Note 31. These disclosures include a mixture of quantitative data that aremeasured in dollar amounts (e.g., cash and short-term deposits amount denominated in foreigncurrency) as well as data that are not measured in dollar amounts, e.g., the exposures arisingfrom trade receivables are represented by the percentage of total trade receivablesdenominated in foreign currencies.

Each entity should customise the information disclosed according to its specific circumstances.

Quantitative disclosures

� Please refer to commentary no. 3 of Note 40(a) (Credit risk)

Sensitivity analysis for market risk

� Please refer to commentary no. 3 of Note 40(c) (Interest rate risk)

� According to FRS 107, foreign currency risk arises on financial instruments that aredenominated in a foreign currency i.e., in a currency other than the functional currency inwhich they are measured. For the purpose of FRS 107, currency risk does not arise fromfinancial instruments that are non-monetary items or from financial instruments denominatedin the functional currency. Currency translation risk arising from its net investments in foreignoperations does not fall within the definition of foreign currency risk according to FRS 107. �

Additional illustrative disclosures:

Sensitivity analysis for market risk

� In the scenario illustrated, there is no impact (other than those affecting net profit) to equityarising from exposures to currency risk as defined by FRS 107.

Illustrative disclosure if there are impact to equity arising from exposures to currency risk:

The following table demonstrates the sensitivity of the Group’s profit before tax and equity toa reasonably possible change in the USD, RMB and Ringgit exchange rates against therespective functional currencies of the Group entities, with all other variables held constant.

Group2015$’000

2014$’000

Profitbefore

tax

Equity Profitbefore

tax

Equity

USD/SGD - strengthened X% (2014: X%) –XX –XX –XX –XX- weakened X% (2014: X%) +XX +XX +XX +XX

USD/RMB - strengthened X% (2014: X%) –XX –XX –XX –XX- weakened X% (2014: X%) +XX +XX +XX +XX

RMB/SGD - strengthened X% (2014: X%) –XX –XX –XX –XX- weakened X% (2014: X%) +XX +XX +XX +XX

Ringgit/SGD - strengthened X% (2014: X%) –XX –XX –XX –XX- weakened X% (2014: X%) +XX +XX +XX +XX

FRS 107.31 and 34

FRS 107.AG B23

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40. Financial risk management objectives and policies (continued)

e) Market price risk

Market price risk is the risk that the fair value or future cash flows of the Group’sfinancial instruments will fluctuate because of changes in market prices (other thaninterest or exchange rates). The Group is exposed to equity price risk arising from itsinvestment in quoted equity securities. These securities are quoted on the SingaporeExchange Securities Trading Limited (SGX-ST) in Singapore and are classified as heldfor trading or available-for-sale financial assets. The Group does not have exposure tocommodity price risk.

The Group’s objective is to manage investment returns and equity price risk using a mixof investment grade shares with steady dividend yield and non-investment gradeshares with higher volatility. The Group’s policy is to limit its interest in the latter typeof investments to 25% (2014: 25%) of its entire equity portfolio. Any deviation fromthis policy is required to be approved by the CEO and audit committee. At the end ofthe reporting period, 24% (2014: 19%) of the Group’s equity portfolio consist of non-investment grade shares of companies operating in PRC and Singapore, while theremaining portion of the equity portfolio comprise investment grade shares included inthe Straits Times Index (STI). Ê

Sensitivity analysis for equity price risk ËÌ

At the end of the reporting period, if the STI had been 2% (2014: 2%) higher/lower withall other variables held constant, the Group’s profit before tax would have been$88,000 (2014: $78,000) higher/lower, arising as a result of higher/lower fair valuegains on held for trading investments in equity instruments, and the Group’s othercomprehensive income would have been $66,000 (2014: $77,000) higher/lower,arising as a result of an increase/decrease in the fair value of equity securitiesclassified as available-for-sale.

Commentary:

Quantitative disclosures

Ê Please refer to commentary no. 3 of Note 40(a) (Credit risk)

Sensitivity analysis for market risk

Ë Please refer to commentary no. 3 of Note 40(c) (Interest rate risk)

Ì In this illustration, the sensitivity analysis for equity price risk has been performed byanalysing the effect of a reasonably possible change in STI on the fair value of the equityinstruments held by the Group, as it is assumed that all the quoted equity securities held bythe Group are listed in Singapore.

FRS 107.33.a

FRS 107.33.band 34.a

FRS 107.40,AGB17-18 andAGB25-27

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 179

41. Capital management Ê

Capital includes debt and equity items as disclosed in the table below.

The primary objective of the Group’s capital management is to ensure that it maintains astrong credit rating and healthy capital ratios in order to support its business andmaximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changesin economic conditions. To maintain or adjust the capital structure, the Group may adjustthe dividend payment to shareholders, return capital to shareholders or issue new shares.No changes were made in the objectives, policies or processes during the years ended 31December 2015 and 31 December 2014.

As disclosed in Note 34(c), a subsidiary of the Group is required by the Foreign EnterpriseLaw of the PRC to contribute to and maintain a non-distributable statutory reserve fundwhose utilisation is subject to approval by the relevant PRC authorities. This externallyimposed capital requirement has been complied with by the above-mentioned subsidiaryfor the financial years ended 31 December 2015 and 2014. Ë

The Group monitors capital using a gearing ratio, which is net debt divided by total capitalplus net debt. The Group’s policy is to keep the gearing ratio between 20% and 40%. TheGroup includes within net debt, loans and borrowings (excluding convertible redeemablepreference shares), trade and other payables, less cash and short-term deposits excludingdiscontinued operations. Capital includes convertible redeemable preference shares,equity attributable to the owners of the Company less the fair value adjustment reserveand the abovementioned restricted statutory reserve fund.

Group

2015$’000

2014$’000

Loans and borrowings (Note 30) 14,604 15,478

Trade and other payables (Note 31) 17,717 19,140

Less: - Convertible redeemable preference shares (Note 30) (450) (428)

- Cash and short-term deposits (Note 27) (6,117) (4,858)

Net debt 25,754 29,332

Convertible redeemable preference shares 450 428

Equity attributable to the owners of the Company 72,669 66,927

Less: - Fair value adjustment reserve (672) (436)

- Statutory reserve fund (903) (740)

Total capital 71,544 66,179

Capital and net debt 97,298 95,551

Gearing ratio 26% 31%

FRS 1.134

FRS 1.135.a.i

FRS 1.135.a

FRS 1.135.a and c

FRS 1.135.a.ii and d

FRS 1.135.a

FRS 1.135.b

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41. Capital management Ê (continued)

Commentary:

Disclosure of capital management information according to entity specific circumstances

Ê FRS 1 requires the disclosure of information (as provided to key management personnel) thatenables users of financial statements to evaluate the entity’s objectives, policies and processesfor managing capital, including (but not limited to) a description and summary quantitative dataof what it manages as capital, the presence and impact of externally imposed capitalrequirements and how the entity is meeting its objectives for managing capital etc. This note aswell as FRS 1.IG10 provide illustrative examples of such disclosures of an entity that is not aregulated financial institution.

It is important to note that the illustration provided in this note is based on certainassumed facts regarding circumstances surrounding XYZ Holdings (Singapore) Limitedand its objectives, policies and processes for managing capital. For example, a gearingratio with a specific measurement basis has been disclosed as this is the measure used tomonitor capital. The Group considers both capital and net debt as relevant components offunding, hence part of its capital management. Other entities may use different methodsto monitor capital or use gearing ratios with different measurement bases. Disclosureswould have to be customised in the light of specific facts and circumstances applicable tothe entity.

Also, an entity may manage capital in a number of ways and be subject to a number of differentcapital requirements. For example, a conglomerate may include entities that undertakeinsurance and banking activities, and those entities may also operate in several jurisdictions.When an aggregate disclosure of capital requirements and how capital is managed would notprovide useful information or distorts a financial statement user’s understanding of an entity’scapital resources, the entity shall disclose separate information for each capital requirement towhich the entity is subject to.

Externally imposed capital requirement

Ë In this illustration, it is assumed that the externally imposed capital requirement has beencomplied with. When an entity has not complied with externally imposed capital requirements,the consequences of such non-compliance shall be disclosed. FRS 1.IG 11 has an example thatillustrates the application of FRS 1.135.e when an entity has not complied with externallyimposed capital requirement during the period.

FRS 1.134 and135

FRS 1.136

FRS 1.135.e

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42. Segment information Ê

For management purposes, the Group is organised into business units based on theirproducts and services, and has four reportable segments as follows:

I. The electronic components segment is a supplier of digital and analogue electroniccomponents for consumer and industrial-grade electronics for manufacturers. Thisreportable segment has been formed by aggregating the customer electroniccomponents segment and the industrial-grade electronics segment, which areregarded by management to exhibit similar economic characteristics. In making thisjudgement, management considers the products and services offered by thesesegments such as specialised electronic components, energy efficiency, and electricalarchitecture are in the areas of common and the segments share common productionfacilities and usage of similar raw materials in the production process. Ë

II. The property segment is in the business of constructing, developing and leasing out ofresidential and commercial properties.

III. The corporate segment is involved in Group-level corporate services, treasuryfunctions and investments in marketable securities.

IV. The fire prevention equipment and services segment produces and installsextinguishers, fire prevention equipment and fire retardant fabrics. This segment hasbeen classified as a discontinued operation during the financial year (Note 11).

Except as indicated above, no operating segments have been aggregated to form theabove reportable operating segments.

Management monitors the operating results of its business units separately for thepurpose of making decisions about resource allocation and performance assessment.Segment performance is evaluated based on operating profit or loss which in certainrespects, as explained in the table below, is measured differently from operating profit orloss in the consolidated financial statements. Group financing (including finance costs)and income taxes are managed on a group basis and are not allocated to operatingsegments.

Transfer prices between operating segments are on an arm’s length basis in a mannersimilar to transactions with third parties.

FRS 108.20, 21.a

FRS 108.22

FRS 108.12

FRS 108.22.aa

FRS 108.27

FRS 108.28.b

FRS 108.27.a

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Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 182

42. Segment information Ê (continued)

Electroniccomponents Property Corporate

Fire preventionequipment and

services(Discontinuedoperation) Ì

Adjustments andeliminations Notes

Per consolidatedfinancial

statements FRS 108.20,21.b

2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Revenue:

External customers 105,292 103,965 31,428 38,606 – – 13,152 14,598 (13,152) (14,598) A 136,720 142,571FRS 108.23.aand 32

Inter-segment – – – – 265 120 – – (265) (120) B – – FRS 108.23.b

Total revenue 105,292 103,965 31,428 38,606 265 120 13,152 14,598 (13,417) (14,718) 136,720 142,571

Results:

Interest income Í – – – – 430 327 – – – – 430 327 FRS 108.23.c

Dividend income – – – – 526 406 – – – – 526 406 FRS 108.23.f

Fair value gains on investment properties – – 489 129 – – – – – – 489 129 FRS 108.23.f

Depreciation and amortisation 2,188 2,092 925 883 150 115 150 125 (150) (125) A 3,263 3,090 FRS 108.23.e

Share of results of joint ventures - - 151 128 - - - - - - 151 128 FRS 108.23.g

Share of results of associates – 94 657 234 – – – – – – 657 328 FRS 108.23.g

Impairment of non-financial assets 500 – – – – – 650 – (650) – A 500 –FRS 36.129.aFRS 108.23.f

Other non-cash expenses 1,121 754 107 95 310 218 – – – – C 1,538 1,067 FRS 108.23.i

Segment profit/(loss) 6,035 5,698 2,001 2,635 452 438 (551) (193) (880) (1,462) D 7,057 7,116 FRS 108.23

Assets:

Investment in joint ventures - - 1,674 1,523 - - - - - - 1,674 1,523 FRS 108.24.a

Investment in associates – 566 10,595 9,755 – – – – – – 10,595 10,321 FRS 108.24.a

Additions to non-current assets 8,134 2,872 2,803 1,560 758 221 – – – – E 11,695 4,653 FRS 108.24.b

Segment assets Î 76,689 73,426 20,449 19,200 12,450 11,960 2,270 2,450 12,489 12,128 F 124,347 119,164 FRS 108.23

Segment liabilities Î 16,076 15,748 10,383 8,152 1,314 1,189 1,043 1,130 20,779 24,096 G 49,595 50,315 FRS 108.23

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 183

42. Segment information Ê (continued)

Notes Nature of adjustments and eliminations to arrive at amounts reported in theconsolidated financial statements Ï

A The amounts relating to the fire prevention equipment and services segmenthas been excluded to arrive at amounts shown in profit or loss as they arepresented separately in the statement of comprehensive income within one lineitem, “loss from discontinued operation, net of tax”.

B Inter-segment revenues are eliminated on consolidation.

C Other non-cash expenses consist of amortisation of land use rights, share-based payments, inventories written-down, provisions, and impairment offinancial assets as presented in the respective notes to the financialstatements.

D The following items are added to/(deducted from) segment profit to arrive at“profit before tax from continuing operations” presented in the consolidatedincome statement:

2015$’000

2014$’000

Segment results of discontinued operation 551 193Share of results of joint ventures 151 128Share of results of associates 657 328Profit from inter-segment sales (105) (50)Finance costs (1,715) (1,512)Unallocated corporate expenses (419) (549)

(880) (1,462)

E Additions to non-current assets consist of additions to property, plant andequipment, investment properties and intangible assets.

F The following items are added to/(deducted from) segment assets to arrive attotal assets reported in the consolidated balance sheet:

2015$’000

2014$’000

Investment in joint ventures 1,674 1,523Investment in associates 10,595 10,321Deferred tax assets 470 463Inter-segment assets (250) (179)

12,489 12,128

G The following items are added to/(deducted from) segment liabilities to arriveat total liabilities reported in the consolidated balance sheet:

2015$’000

2014$’000

Deferred tax liabilities 2,378 1,926Income tax payable 2,927 6,734Loans and borrowings (including discontinued operation) 15,604 15,478Inter-segment liabilities (25) (20)

20,779 24,069

FRS 108.21.c

FRS 108.28.a and b

FRS 108.28.a

FRS 108.28.e

FRS 108.28.b

FRS 108.28.c

FRS 108.28.d

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 184

42. Segment information Ê (continued)

Geographical information�

Revenue and non-current assets information based on the geographical location ofcustomers and assets respectively are as follows:

Revenues Non-current assets

2015 2014 2015 2014

$’000 $’000 $’000 $’000

Singapore 76,432 86,464 20,570 19,346

People’s Republic of China 32,970 33,005 15,896 15,591

Malaysia 20,990 20,440 5,061 4,138

Vietnam and others 19,480 17,260 3,082 3,010

Discontinued operation (13,152) (14,598) (1,016) -

136,720 142,571 43,593 42,085

Non-current assets information presented above consist of property, plant and equipment,investment properties, intangible assets, and land use rights as presented in theconsolidated balance sheet.

Information about a major customer�

Revenue from one major customer amount to $15,102,000 (2014: $16,080,000), arisingfrom sales by the electronics components segment.

Commentary:

Information about segment profit or loss

Ê In addition to a measure of profit or loss and total assets for each reportable segments, entitiesare required to disclose the following about each reportable segment if the specified amountsare included in the measure of segment profit or loss reviewed by the chief operating decisionmaker (CODM), or are otherwise regularly provided to the CODM, even if not included in thatmeasure of segment profit or loss:(a) Revenues from external customers(b) Revenues from transactions with other operating segments of the same entity(c) Interest revenue(d) Interest expense*(e) Depreciation and amortisation(f) Material items of income and expense disclosed in accordance with paragraph 86 of FRS 1

Presentation of Financial Statements(g) The entity’s interest in profit or loss of associates and joint ventures accounted for by the

equity method(h) Income tax expense or income*(i) Material non-cash items other than depreciation and amortisation

* In this illustration, interest expense and income tax expense have not been disclosed bysegment as these items are managed on a group basis, and are not provided to the CODM atthe operating segment level.

FRS 108.33.a and bFRS 108.20

FRS 108.33.a.i and b.i

FRS 108.34

FRS 108.23

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 185

42. Segment information Ê (continued)

Commentary (continued):

Amendments to FRS 108 Operating Segments

Ë The Amendments to FRS 108 Operating Segments included in the Improvements to FRSs (January2014) which was effective for annual period beginning on or after 1 July 2014 clarifies that anentity must disclose judgements made by management in applying the aggregation criteria inparagraph 12 of FRS 108, including a brief description of operating segments that have beenaggregated and the economic characteristics (e.g. sales and gross margins) used to assesswhether the segments are ‘similar’. The amendment also clarifies that the reconciliation ofsegment assets to total assets is only required to be disclosed if the reconciliation is reported tothe chief operating decision maker, similar to the required disclosure for segment liabilities.The Group has applied aggregation criteria in FRS 108.12 and the disclosure of the judgementsmade by management in aggregating the segments is disclosed accordingly. In addition, the Grouphas presented the reconciliation of segment assets to total assets in previous periods andcontinue to disclose the same above in these financial statements as the reconciliation is reportedto the chief operating decision maker for the purpose of decision making.

Discontinued operation

Ì FRS 108 does not provide specific disclosure requirements for an operating segment classified asdiscontinued operation. An entity is therefore not required to provide such segment informationas long as the classification criteria held for sale is met. It is however allowed to continue topresent segment information as long as the definition as operating segment is met.In this illustration, an entire reportable segment has been classified as discontinued operation inthe current period. As this operating segment still meet the quantitative thresholds for separatereporting, it continues to be reported in the segment information.

Interest income

Í An entity shall report interest revenue separately from interest expense for each reportablesegment unless a majority of the segment’s revenues are from interest and the CODM reliesprimarily on net interest revenue to assess the performance of the segment and make decisionsabout resources to be allocated to the segment. In that situation, an entity may report thatsegment’s interest revenue net of its interest expense and disclose that it has done so.

Disclosure of operating segment assets and segment liabilities

Î Disclosure of operating segment assets and liabilities are required only where such measures areprovided to the CODM.

Explanation of measurements of segment profit or loss, segment assets and segment liabilities

Ï If not apparent from the disclosures of reconciliations in this note, entities are required to disclosefurther information regarding the nature of differences between the measurements of segmentprofit or loss, segment assets, segment liabilities, and the entity’s profit or loss before tax anddiscontinued operations, assets and liabilities. Those differences could include accounting policiesand policies for allocation of centrally incurred costs, jointly used assets, jointly utilised liabilitiesthat are necessary for an understanding of the reported segment information.The following should also be disclosed, where applicable:- The nature of any changes from prior periods in the measurement methods used to

determine reported segment profit or loss and the effect, if any, of those changes on themeasure of segment profit or loss.

- The nature and effect of any asymmetrical allocations to reportable segments. For example,an entity might allocate depreciation expense to a segment without allocating the relateddepreciable assets to that segment.

FRS 108.13

FRS 108.23

FRS 108.23

FRS 108.27.b-d

FRS 108.27.e-f

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 186

42. Segment information Ê (continued)

Commentary (continued):

Information about segment profit or loss

� An entity should disclose:(a) Revenues from external customers (i) attributed to the entity’s country of domicile; and

(ii) attributed to all foreign countries in total from which the entity derives revenues. Ifrevenues from external customers attributed to an individual foreign country arematerial, those revenues should be disclosed separately. An entity should disclose thebasis for attributing revenues from external customers to individual countries.

(b) Non-current assets other than financial instruments, deferred tax assets, post-employment benefit assets, and rights arising under insurance contracts (i) located in theentity’s country of domicile and (ii) located in all foreign countries in total in which theentity holds assets. If assets in an individual foreign country are material, those assetsshould be disclosed separately.

Information about major customers

� For the purposes of disclosing information about major customers, a group of entities known toa reporting entity to be under common control shall be considered a single customer, and agovernment (national, state, provincial, territorial, local or foreign) and entities known to thereporting entity to be under the control of that government shall be considered a singlecustomer.

43. Dividends

Group and Company

2015$’000

2014$’000

Declared and paid during the financial year:

Dividends on ordinary shares:- Final exempt (one-tier) dividend for 2014: 4.34 cents (2012: 4.45 cents)

per share 1,001 1,025- Interim exempt (one-tier) dividend for 2015: 2.49 cents (2014: 2.41

cents) per share 612 557

1,613 1,582

Proposed but not recognised as a liability as at 31 December:

Dividends on ordinary shares, subject to shareholders’ approval at the AGM:- Final exempt (one-tier) dividend for 2015: 4.10 cents (2014: 4.34 cents)

per share 1,008 1,001

FRS 108.33

FRS 108.34

FRS 1.137.a,FRS 10.12

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XYZ Holdings (Singapore) Limited and its subsidiaries

Notes to the financial statementsFor the financial year ended 31 December 2015

XYZ Holdings (Singapore) Limited | 187

44. Events occurring after the reporting period

On 14 January 2015, a building of the Group, with net carrying value of $900,000, wasseverely damaged by fire and inventories with net carrying value of $157,000 were lost.It is expected that insurance proceeds will fall short of the costs of rebuilding and loss ofinventories by $250,000. The financial statements for the year ended 31 December 2015have not been adjusted for the financial effect of this incident.

On 15 February 2015, the Company completed the disposal of one of its wholly-ownedsubsidiary, Good Fire Prevention Pte Ltd (GFP), which has been classified as discontinuedoperation (Note 11) as at 31 December 2015, for a cash consideration of $150,000.

45. Authorisation of financial statements for issue

The financial statements for the year ended 31 December 2015 were authorised for issuein accordance with a resolution of the directors on 27 February 2016.

FRS 10.21 and 22.d

FRS 10.21 and 22.a

FRS 10.17

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XYZ Holdings (Singapore) Limited

Appendix A-1 Consolidated statement of comprehensiveincome in one statement – illustrating theanalysis of expenses by nature

XYZ Holdings (Singapore) Limited | 188

Illustrating the Statement of Comprehensive Income in one statement with the analysis ofexpenses by nature:

Note2015$’000

2014$’000 FRS 1.81A.a, FRS 1.102

Continuing operationsRevenue X 136,720 142,571 FRS 1.82.a, FRS 1.102

Other items of income FRS 1.102 Interest income X 430 327 FRS 18.35.b.iii Dividend income from investment securities 526 406 FRS 18.35.b.v Other income X 1,511 886

Items of expense FRS 1.99 Raw materials and consumables used (98,607) (92,367) FRS 1.102 Changes in inventories of finished goods and work-in-progress (2,203) (16,631) FRS 1.102 Employee benefits expense X (20,502) (19,024) FRS 1.102 Depreciation and amortisation expense (3,113) (2,965) FRS 1.102 Impairment losses (833) (425) FRS 1.85 Net foreign exchange loss (136) (145) FRS 21.52.a Finance costs (1,715) (1,512) FRS 1.82.b Other expenses (5,829) (4,461) FRS 1.102

Share of results of joint venture 151 128 FRS 1.82.cShare of results of associates 657 328 FRS 1.82.cProfit before tax from continuing operations X 7,057 7,116 FRS 1.85Income tax expense X (1,557) (1,687) FRS 1.82.d, FRS 12.77Profit from continuing operations, net of tax 5,500 5,429 FRS 1.85Discontinued operation

Loss from discontinued operation, net of tax X (544) (188)FRS 1.82.ea, FRS 105.33.a &33A

Profit for the year 4,956 5,241 FRS 1.81A.aOther comprehensive income:�

Items that will not be reclassified to profit or loss: FRS 1.82A.aNet surplus on revaluation of freehold land and buildings 1,250 2,404 FRS 1.82A.a, FRS 16.77.fShare of gain on property revaluation of associates Ë 62 10 FRS 1.82A.a, FRS 28.39

1,312 2,414Items that may be reclassified subsequently to profit or loss: FRS 1.82A.bNet gain on fair value changes of available-for-sale financial assets 174 98 FRS 1.82A.bForeign currency translation (181) (82) FRS 1.82A.b, FRS 21.52.b

(7) 16

Other comprehensive income for the year, net of tax 1,305 2,430 FRS 1.81A.b

Total comprehensive income for the year 6,261 7,671 FRS 1.81A.c

Profit for the year attributable to:Owners of the Company Profit from continuing operations, net of tax 5,320 5,029 FRS 105.33.d Loss from discontinued operation, net of tax (544) (188) FRS 105.33.d

4,776 4,841 FRS 1.81B.a.iiNon-controlling interests Profit from continuing operations, net of tax 180 400 Loss from discontinued operation, net of tax - -

180 400 FRS 1.81B.a.i

Total comprehensive income attributable to:Owners of the Company 6,091 7,211 FRS 1.81B.b.iiNon-controlling interests 170 460 FRS 1.81B.b.i

6,261 7,671

Attributable to:Owners of the Company Total comprehensive income from continuing operations, net of tax X 6,585 7,379 FRS 105.33.d Total comprehensive income from discontinued operations, net of tax X (494) (168) FRS 105.33.d

6,091 7,211

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XYZ Holdings (Singapore) Limited

Appendix A-1 Consolidated statement of comprehensiveincome in one statement – illustrating theanalysis of expenses by nature

XYZ Holdings (Singapore) Limited | 189

Illustrating the Statement of Comprehensive Income in one statement with the analysis ofexpenses by nature (continued):

Note2015$’000

2014$’000 FRS 1.81A.a, FRS 1.102

Earnings per share from continuing operations attributable to ownersof the Company (cents per share)

Basic X 22.98 21.81 FRS 33.66Diluted X 22.73 21.58 FRS 33.66

Earnings per share (cents per share) Basic X 20.63 21.00 FRS 33.66

Diluted X 20.17 20.53 FRS 33.66

Commentary:

Tax effects related to each component of other comprehensive income

� An entity may present components of other comprehensive income either:

(a) net of related tax effects, as illustrated in the statement of comprehensive income,or

(b) before related tax effects with one amount shown for the aggregate amount ofincome tax relating to those items.

If an entity elects alternative (b), it shall allocate the tax between the items that might bereclassified subsequently to the profit or loss section and those that will not bereclassified subsequently to the profit or loss section.

Ë In this illustration, the share of other comprehensive income of associates relates toproperty revaluation attributable to owners of the associates, an item which will not bereclassified to profit or loss subsequently.

If an entity has share of other comprehensive income of associates which relates to itemsthat may be reclassified subsequently to profit or loss, the item shall be presented underthe group of items that may be reclassified subsequently to profit or loss.

FRS 1.91

FRS 1.82A

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XYZ Holdings (Singapore) Limited

Appendix A-2 Hedge accounting

XYZ Holdings (Singapore) Limited | 190

Extracts of summary of significant accounting policies illustrating accounting policies relating tohedge accounting:

X. Summary of significant accounting policies

X.X Hedge accounting

The Group applies hedge accounting for certain hedging relationships which qualify forhedge accounting.

For the purpose of hedge accounting, hedges are classified as:

§ fair value hedges when hedging the exposure to changes in the fair value of arecognised asset or liability or an unrecognised firm commitment

§ cash flow hedges when hedging exposure to variability in cash flows that is eitherattributable to a particular risk associated with a recognised asset or liability or ahighly probable forecast transaction or the foreign currency risk in an unrecognisedfirm commitment; or

§ hedges of a net investment in a foreign operation.

At the inception of a hedging relationship, the Group formally designates and documentsthe hedging relationship to which the Group wishes to apply hedge accounting and the riskmanagement objective and strategy for undertaking the hedge. The documentationincludes identification of the hedging instrument, the hedged item or transaction, thenature of the risk being hedged and how the entity will assess the effectiveness of changesin the hedging instrument’s fair value in offsetting the exposure to changes in the hedgeditem’s fair value or cash flows attributable to the hedged risk. Such hedges are expected tobe highly effective in achieving offsetting changes in fair value or cash flows and areassessed on an ongoing basis to determine that they actually have been highly effectivethroughout the financial reporting periods for which they were designated.

Hedges which meet the strict criteria for hedge accounting are accounted for as follows:

Fair value hedges

The change in the fair value of a hedging derivative is recognised in profit or loss infinance costs. The change in the fair value of the hedged item attributable to the riskhedged is recorded as a part of the carrying value of the hedged item and is alsorecognised in profit or loss in finance costs.

For fair value hedges relating to items carried at amortised cost, the adjustment tocarrying value is amortised through profit or loss over the remaining term of the hedgeusing the effective interest rate method. Effective interest rate amortisation may begin assoon as an adjustment exists and no later than when the hedged item ceases to beadjusted for changes in its fair value attributable to the risk being hedged. If the hedgeditem is derecognised, the unamortised fair value is recognised immediately in profit or loss.

When an unrecognised firm commitment is designated as a hedged item, the subsequentcumulative change in the fair value of the firm commitment attributable to the hedged riskis recognised as an asset or liability with a corresponding gain or loss recognised in profitor loss.

The Group has an interest rate swap that is used as a hedge for the exposure of changes inthe fair value of its X% fixed rate secured loan. See Note X for more details.

FRS 107.21

FRS 39.86.a

FRS 39.86.b

FRS 39.86.c

FRS 39.88

FRS 39.89

FRS 39.92

FRS 39.93

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Appendix A-2 Hedge accounting

XYZ Holdings (Singapore) Limited | 191

Extracts of summary of significant accounting policies illustrating accounting policies relating tohedge accounting (continued):

X. Summary of significant accounting policies (continued)

X.X Hedge accounting (continued)

Cash flow hedges

The effective portion of the gain or loss on the hedging instrument is recognised directly inother comprehensive income in the cash flow hedge reserve, while any ineffective portionis recognised immediately in profit or loss in other expenses.

The Group uses forward currency contracts as hedges of its exposure to foreign currencyrisk in forecasted transactions and firm commitments, as well as forward commoditycontracts for its exposure to volatility in the commodity prices. The ineffective portionrelating to foreign currency contracts is recognised in finance costs and the ineffectiveportion relating to commodity contracts is recognised in other operating income. Refer toNote X for more details.

Amounts recognised as other comprehensive income are transferred to profit or loss whenthe hedged transaction affects profit or loss, such as when the hedged financial income orfinancial expense is recognised or when a forecast sale occurs. Where the hedged item isthe cost of a non-financial asset or non-financial liability, the amounts recognised as othercomprehensive income are transferred to the initial carrying amount of the non-financialasset or liability.

If the forecast transaction or firm commitment is no longer expected to occur, thecumulative gain or loss previously recognised in equity is transferred to profit or loss. Ifthe hedging instrument expires or is sold, terminated or exercised without replacement orrollover, or if its designation as a hedge is revoked, any cumulative gain or loss previouslyrecognised in other comprehensive income remains in other comprehensive income untilthe forecast transaction or firm commitment affects profit or loss.

Hedges of a net investment

Hedges of a net investment in a foreign operation, including a hedge of a monetary itemthat is accounted for as part of the net investment, are accounted for in a way similar tocash flow hedges. Gains or losses on the hedging instrument relating to the effectiveportion of the hedge are recognised as other comprehensive income while any gains orlosses relating to the ineffective portion are recognised in profit or loss. On disposal of theforeign operation, the cumulative value of any such gains or losses recorded in equity istransferred to profit or loss.

The Group uses a loan as a hedge of its exposure to foreign exchange risk on itsinvestments in foreign subsidiaries. Refer to Note X for more details.

FRS 39.95

FRS 39.97, 98and 100

FRS 39.101

FRS 39.102

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XYZ Holdings (Singapore) Limited

Appendix A-2 Hedge accounting

XYZ Holdings (Singapore) Limited | 192

Extracts of notes to the financial statements illustrating the disclosures of fair value hedgeaccounting:

X. Hedging activities

X.X Fair value hedges Ê

At 31 December 2015, the Group had an interest rate swap agreement in place with anotional amount of USDXXX ($XXX) (2014: nil) whereby the Group receives a fixed rate ofinterest of X.XX% and pays a variable rate equal to LIBOR+X% on the notional amount. Theswap is being used to hedge the exposure to changes in the fair value of its X.XX% securedloan.

The decrease in fair value of the interest rate swap of $XXX (2014: nil) has beenrecognised in finance costs and offset with a similar gain on the bank borrowings. Theineffectiveness recognised in 2015 was immaterial.

Commentary:

Disclosure requirement regarding fair value hedges

Ê FRS 107 requires separate disclosures of the amount of gain or loss on the hedging instrumentand on the hedged item attributable to the hedged risk in a fair value hedge relationship.

FRS 107.22FRS 107.24.a

FRS 107.24.a

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XYZ Holdings (Singapore) Limited

Appendix A-2 Hedge accounting

XYZ Holdings (Singapore) Limited | 193

Extracts of notes to the financial statements illustrating the disclosures of cash flow hedgeaccounting:

X. Hedging activities

X.X Cash flow hedges Ê

Foreign currency risk

Foreign currency forward contracts measured at fair value through other comprehensiveincome are designated as hedging instruments in cash flow hedges of forecast sales in theUnited States and forecast purchases in the United Kingdom. These forecast transactionsare highly probable, and they comprise about 25% of the Group’s total expected sales andabout 65% of its total expected purchases.

While the Group also enter into other foreign exchange forward contracts with theintention to reduce the foreign exchange risk of expected sales and purchases, these othercontracts are not designated in hedge relationships and are measured at fair value throughprofit and loss.

The foreign exchange forward contract balances vary with the level of expected foreigncurrency sales and purchases and changes in foreign exchange forward rates.

The terms of the foreign currency forward contracts have been negotiated for theexpected highly probable forecast transactions. As a result, no hedge ineffectivenessarises requiring recognition through profit or loss. Notional amounts are as provided inNote X.

The cash flow hedges of the expected future sales in January 2016 were assessed to behighly effective and a net unrealised gain of $XXX, with a deferred tax liability of $XXXrelating to the hedging instruments, is included in other comprehensive income.

The cash flow hedges of the expected future purchases in February and March 2016 wereassessed to be highly effective, and as at 31 December 2015, a net unrealised loss of$XXX, with a related deferred tax asset of $XXX was included in other comprehensiveincome in respect of these contracts.

At the end of December 2014, the cash flow hedges of the expected future sales in thefirst quarter of 2015 were assessed to be highly effective and an unrealised gain of $XXXwith a deferred tax liability of $XXX was included in other comprehensive income inrespect of these contracts. The cash flow hedges of the expected future purchases in thefirst quarter of 2015 were also assessed to be highly effective and an unrealised loss of$XXX, with a deferred tax asset of $XXX was included in other comprehensive income inrespect of these contracts.

The amount removed from other comprehensive income during the year and included inthe carrying amount of the hedging items as a basis adjustment was immaterial for both2015 and 2014. The amounts retained in other comprehensive income at 31 December2015 are expected to mature and affect profit or loss in 2016.

2015 2014

Assets Liabilities Assets Liabilities

Group $’000 $’000 $’000 $’000

Foreign currency forward contracts

Fair value XXX (XXX) XXX (XXX)

FRS 107.23.a

FRS 107.24.b

FRS 107.23.c

FRS 107.23.c

FRS 107.23.c

FRS 107.23.d, e anda

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XYZ Holdings (Singapore) Limited

Appendix A-2 Hedge accounting

XYZ Holdings (Singapore) Limited | 194

Extracts of notes to the financial statements illustrating the disclosures of cash flow hedgeaccounting:

X. Hedging activities

X.X Cash flow hedges Ê (continued)

Commodity price risk

The Group purchases copper on an ongoing basis as its operating activities in theelectronic division require a continuous supply of copper for the production of itselectronic devices. The increased volatility in copper price over the past 12 months has ledto the decision to enter into commodity forward contracts

These contracts, which commenced on 1 July 2015, are expected to reduce the volatilityattributable to price fluctuations of copper. Hedging the price volatility of forecast copperpurchases is in accordance with the risk management strategy outlined by the Board ofDirectors. The hedging relationships are for a period between 3 to 12 months based onexisting purchase agreements. The Group designated only the spot-to-spot movement ofthe entire commodity purchase price as the hedged risk. The forward points of thecommodity forward contracts are therefore excluded from the hedge designation. Changesin fair value of the forward points are recognised in profit or loss in ‘Other expenses’ wereimmaterial during the year.

As at 31 December 2015, the fair value of outstanding commodity forward contractsamounted to a liability of $XXX. The ineffectiveness recognised in ‘Other expenses’ inprofit or loss for the current year was $XXX (see Note X). The cumulative effective portionof $XXX is reflected in other comprehensive income and will affect the profit or loss in thefirst six months of 2016.

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XYZ Holdings (Singapore) Limited

Appendix A-2 Hedge accounting

XYZ Holdings (Singapore) Limited | 195

Extracts of notes to the financial statements illustrating the disclosures of cash flow hedgeaccounting: (continued)

X. Hedging activities

X.X Cash flow hedges Ê (continued)

Hedging reserve

The cash flow hedge reserve contains the effective portion of the cash flow hedgerelationships incurred as at the reporting date. $XXX are made up of the net movements incash flow hedges and the effective portion of the forward commodity contract, net of tax.

X.X Components of other comprehensive income

Group

2015

$’000

2014

$’000

Net movement on cash flow hedges:

Gain/ (losses) arising during the year

– Commodity forward contracts (XXX) (XXX)

– Foreign currency forward contracts (XXX) –Reclassification adjustments for gains included in the statement of

comprehensive income� XXX XXX

(XXX) XXX

Commentary:

Disclosure requirements regarding cash flow hedges

Ê Where applicable, FRS 107 requires the disclosure of the ineffectiveness recognised in profit orloss that arises from cash flow hedges.

� FRS 107 requires the disclosure of the amount of gain or loss on a hedging instrument in a cashflow hedge relationship reclassified from equity to profit or loss, showing the amount included ineach line in the statement of comprehensive income.

FRS 1.79.b

FRS 1.97

FRS 1.92,FRS 107.23.d

FRS 107.24.b

FRS 107.23.d

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XYZ Holdings (Singapore) Limited

Appendix A-2 Hedge accounting

XYZ Holdings (Singapore) Limited | 196

Extracts of notes to the financial statements illustrating the disclosures of hedge of netinvestments in foreign operations:

X. Hedging activities

X.X Hedge of net investments in foreign operations

Included in loans at 31 December 2015 was a borrowing of USDXXX which has beendesignated as a hedge of the net investment in the two subsidiaries in the United States,XX Inc. and XXX Inc. This borrowing is being used to hedge the Group’s exposure to foreignexchange risk on these investments. Gains or losses on the retranslation of this borrowingare transferred to other comprehensive income to offset any gains or losses on translationof the net investments in the subsidiaries. There is no ineffectiveness in the years ended31 December 2015 and 2014. Ê

X.X Foreign currency translation reserve

The foreign currency translation reserve is also used to record the effect of hedging of netinvestments in foreign operations.

X.X Components of other comprehensive income

Group

2015

$’000

2014

$’000

Net gains/(losses) on hedge of net investment XXX (XXX)

Commentary:

Disclosure requirement regarding hedges of net investments in foreign operations

Ê Where applicable, FRS 107 requires the disclosure of the ineffectiveness recognised in profit orloss that arises from hedges of net investments in foreign operations.

FRS 107.22

FRS 1.79.b

FRS 1.97

FRS 107.24.c

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XYZ Holdings (Singapore) Limited

Appendix A-3 Agreements for the construction of realestate

XYZ Holdings (Singapore) Limited | 197

Extract of summary of significant accounting policies illustrating accounting policies relating toagreements for the construction of real estate:

Commentary:

Stage of completion

Ê The stage of completion of a contract may be determined in a variety of ways. The entity usesthe method that measures reliably the work performed. Depending on the nature of the contract,other acceptable methods include surveys of work performed and completion of a physicalproportion of the contract work.

X. Significant accounting policies

X.X Revenue

X) Sale of completed development property

A development property is regarded as sold when the significant risks and returns havebeen transferred to the buyer, which is normally on unconditional exchange of contracts.For conditional exchanges, sales are recognised only when all the significant conditions aresatisfied.

XX) Sale of development property under construction

Where development property is under construction and agreement has been reached tosell such property when construction is complete, the Directors consider whether thecontract comprises:

- A contract to construct a property; or

- A contract for the sale of completed property

a) Where a contract is judged to be for the construction of a property, revenue isrecognised using the percentage of completion method as construction progresses.

b) Where the contract is judged to be for the sale of a completed property, revenue isrecognised when the significant risks and rewards of ownership of the real estate havebeen transferred to the buyer (i.e. revenue is recognised using the completed contractmethod).

i) If, however, the legal terms of the contract are such that the constructionrepresents the continuous transfer of work in progress to the purchaser, thepercentage of completion method of revenue recognition is applied and revenueis recognised as work progresses.

ii) In Singapore context, INT FRS 115 includes an accompanying note on theapplication of INT FRS 115 in Singapore which requires the percentage ofcompletion method of revenue recognition to be applied to sale of privateresidential properties in Singapore prior to completion of the properties that areregulated under the Singapore Housing Developers (Control and Licensing) Act(Chapter 130) and uses the standard form of sale and purchase agreements(SPAs) prescribed in the Housing Developers Rules. The accompanying note toINT FRS 115 does not address the accounting treatment for other SPAs,including SPAs with a Deferred Payment Scheme feature in Singapore.

In the above situations (i) and (ii), the percentage of work completed is measuredbased on the costs incurred up until the end of the reporting periods as a proportion oftotal costs expected to be incurred. Ê

INT FRS 115.17FRS 11.30

FRS 18.14

FRS 18.14

INT FRS 115.13

INT FRS 115.17

INT FRS 115.20.a

INT FRS 115.17,INT FRS 115.20.c

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XYZ Holdings (Singapore) Limited

Appendix A-3 Agreements for the construction of realestate

XYZ Holdings (Singapore) Limited | 198

Extract of summary of significant accounting judgements and estimates relating to revenuerecognition on development property under construction:

X. Significant accounting judgements and estimates

X.X Key sources of estimation uncertainty

X) Revenue recognition on development property under construction

The Group recognises revenue for pre-completion sales of certain types of properties byreference to the stage of completion using the percentage of completion method. Thestage of completion is measured based on the costs incurred up until the end of thereporting periods as a proportion of total costs expected to be incurred. Significantassumptions are required to estimate the total contract costs and the recoverablevariation works that affect the stage of completion and the revenue respectively. Inmaking these estimates, management has relied on past experience and knowledge of theproject engineers. The carrying amounts of assets and liabilities as well as the revenuefrom sale of development property (recognised on percentage of completion basis) aredisclosed in Note X (Development Property) and Note Y (Revenue) to the financialstatements respectively.

Extract of notes to financial statements illustrating the disclosure of revenue from sale ofdevelopment property:

X. Revenue

Group

2015

$’000

2014

$’000

Revenue from sale of development properties (recognised oncompleted contract basis) XXX XXX

Revenue from sale of development properties (recognised onpercentage of completion basis)

XXX XXX

FRS 18.35.b.i

FRS 18.35.b.i,INT FRS 115.20.b

FRS 1.125

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XYZ Holdings (Singapore) Limited

Appendix A-3 Agreements for the construction of realestate

XYZ Holdings (Singapore) Limited | 199

Extract of notes to the financial statements illustrating the disclosure of development property:

X. Development property

The Group includes a division that develops residential property, which it sells in the ordinarycourse of business and has entered into contracts to sell certain of these properties oncompletion of construction.

The Group has considered the application of INT FRS 15 to these contracts and concluded thatthere pre-completion contracts were not, in substance, construction contracts. However,where the legal terms were such that the construction represented the continuous transfer ofwork in progress to the purchaser, the percentage of completion method of revenuerecognition has been applied and revenue recognised as work progressed. Developmentexpenditure incurred in respect of inventory property dealt with under the percentage ofcompletion method is recognised in profit or loss in the period incurred.

Revenue from sales of residential property where the contracts are not in substanceconstruction contracts and do not lead to a continuous transfer of work in progress, isrecognised when both: (i) construction is complete; and (ii) either legal title to the propertyhas been transferred or there has been an unconditional exchange of contracts. Constructionand other expenditure attributable to such property is included in inventory property untildisposal. During the year, the Group transferred the remaining unsold units of a residentialproperty to investment property, in conjunction with the commencement of operating lease ofthese units to a third party.

The amount recognised in costs of sales for the year in respect of inventory property is:

Group

2015

$’000

2014

$’000

In respect of sales recognised on a percentage of completionbasis XXX XXX

In respect of other inventory property sales XXX XXX

Group

2015

$’000

2014

$’000

At 1 January XXX XXXConstruction costs incurred XXX XXXInterest capitalised XXX XXXTransfer to completed investment property XXX XXXDisposals (recognised in cost of sales) (XXX) -At 31 December (XXX) (XXX)

INT FRS 115.20

FRS 2.36(d)

INT FRS 115.21

FRS 11.40(a)

FRS 23.26(a)

FRS 40.57(d)

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XYZ Holdings (Singapore) Limited

Appendix A-3 Agreements for the construction of realestate

XYZ Holdings (Singapore) Limited | 200

X. Development property

The following table provides information about such continuous transfer agreements that arein progress at the reporting date:

Group

2015

$’000

2014

$’000

Aggregate costs incurred and recognised to date XXX XXXProfit before tax recognised to date XXX XXXAdvances received XXX XXX

INT FRS 115.21

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XYZ Holdings (Singapore) Limited

Appendix A-4 Defined benefit plans ��

XYZ Holdings (Singapore) Limited | 201

Extract of summary of significant accounting policies illustrating changes in accounting policieson adoption of Revised FRS 19:

X. Summary of significant accounting policies (continued)

X.X Defined benefit plan

The net defined benefit liability or asset is the aggregate of the present value of thedefined benefit obligation (derived using a discount rate based on high quality corporatebonds) at the end of the reporting period reduced by the fair value of plan assets (if any),adjusted for any effect of limiting a net defined benefit asset to the asset ceiling. The assetceiling is the present value of any economic benefits available in the form of refunds fromthe plan or reductions in future contributions to the plan.

The cost of providing benefits under the defined benefit plans is determined separately foreach plan using the projected unit credit method.

Defined benefit costs comprise the following:

- Service cost

- Net interest on the net defined benefit liability or asset

- Remeasurements of net defined benefit liability or asset

Service costs which include current service costs, past service costs and gains or losses onnon-routine settlements are recognised as expense in profit or loss. Past service costs arerecognised when plan amendment or curtailment occurs.

Net interest on the net defined benefit liability or asset is the change during the period inthe net defined benefit liability or asset that arises from the passage of time which isdetermined by applying the discount rate based on high quality corporate bonds to the netdefined benefit liability or asset. Net interest on the net defined benefit liability or asset isrecognised as expense or income in profit or loss.

Remeasurements comprising actuarial gains and losses, return on plan assets and anychange in the effect of the asset ceiling (excluding net interest on defined benefit liability)are recognised immediately in other comprehensive income in the period in which theyarise. Remeasurements are recognised in retained earnings within equity and are notreclassified to profit or loss in subsequent periods.

Plan assets are assets that are held by a long-term employee benefit fund or qualifyinginsurance policies. Plan assets are not available to the creditors of the Group, nor can theybe paid directly to the Group. Fair value of plan assets is based on market priceinformation. When no market price is available, the fair value of plan assets is estimated bydiscounting expected future cash flows using a discount rate that reflects both the riskassociated with the plan assets and the maturity or expected disposal date of those assets(or, if they have no maturity, the expected period until the settlement of the relatedobligations).

The Group’s right to be reimbursed of some or all of the expenditure required to settle adefined benefit obligation is recognised as a separate asset at fair value when and onlywhen reimbursement is virtually certain.

FRS 19.8

FRS 19.67

FRS 19.120

FRS 19.8FRS 19.103

FRS 19.8FRS 19.123

FRS 19.127FRS 19.122

FRS 19.8FRS 19.113

FRS 19.116

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XYZ Holdings (Singapore) Limited

Appendix A-4 Defined benefit plans ��

XYZ Holdings (Singapore) Limited | 202

Extracts of summary of significant accounting estimates and judgements relating to definedbenefit plan:

X. Significant accounting judgements and estimates

X.X Key sources of estimation uncertainty

The cost of defined benefit pension plans and other post-employment medical benefits aswell as the present value of the pension obligation are determined using actuarialvaluations. The actuarial valuation involves making various assumptions. These include thedetermination of the discount rates, expected rates of return of assets, future salaryincreases, mortality rates and future pension increases. Due to the complexity of thevaluation, the underlying assumptions and its long-term nature, defined benefit obligationsare highly sensitive to changes in these assumptions. All assumptions are reviewed at eachreporting date. The net benefit liability as at 31 December 2015 is $XXX (2014: $XXX).Further details are provided in Note X.

In determining the appropriate discount rate, management considers the interest rates ofhigh quality corporate bonds in the respective currencies with at least AA rating, withextrapolated maturities corresponding to the expected duration of the defined benefitobligation. The underlying bonds are further reviewed for quality, and those havingexcessive credit spreads are removed from the population of bonds on which the discountrate is based, on the basis that they do not represent high quality bonds.

The mortality rate is based on publicly available mortality tables for the specific countryand is modified accordingly with estimates of mortality improvements. Future salaryincreases and pension increases are based on expected future inflation rates for thespecific country.

Further details about the assumptions used are provided in Note X.

FRS 1.125

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XYZ Holdings (Singapore) Limited

Appendix A-4 Defined benefit plans ��

XYZ Holdings (Singapore) Limited | 203

Extracts of notes to the financial statements illustrating the disclosures relating to defined benefit plan:

X. Defined benefit plan Ê

The Group operates two defined benefit pension plans, both of which require contributions to be made to separately administered funds. One provides a pensionof 2% of final salary for each year of service (Singapore plan), while the other provides 2.5% of average salary (US plan). Both benefit plans become vested afterfive years of service and require contributions to be made to separately administered funds.�The Group also provides additional post employment healthcare benefits to certain senior employees in Singapore. These benefits are unfunded.The amount included in the consolidated balance sheet arising from the entity’s obligation in respect of its defined benefit plans is as follows:

Funded pension plans Unfundedpost-employment medical

benefitsSingapore plan US plan Total

31December

2015$’000

31December

2014$’000

31December

2015$’000

31December

2014$’000

31December

2015$’000

31December

2014$’000

31December

2015$’000

31December

2014$’000

Present value of defined benefitobligation

XXX XXX XXX XXX XXX XXX XXX XXX

Fair value of plan assets (XXX) (XXX) (XXX) (XXX) (XXX) (XXX) – -

XXX (XXX) XXX XXX XXX XXX XXX XXX

Restrictions on asset recognised - XXX - - - XXX -

Net liability arising from definedbenefit obligation XXX (XXX) XXX XXX XXX XXX XXX XXX

FRS 19.135.aFRS 19.139.a.i

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Appendix A-4 Defined benefit plans ��

XYZ Holdings (Singapore) Limited | 204

X. Defined benefit plan Ê (continued)

Changes in present value of the defined benefit obligations are as follow:�

Funded pension plans Unfundedpost-employment

medicalbenefitsSingapore plan US plan Total

2015$’000

2014$’000

2015$’000

2014$’000

2015$’000

2014$’000

2015$’000

2014$’000

At 1 January XXX XXX XXX XXX XXX XXX XXX XXX

Interest cost XXX XXX XXX XXX XXX XXX - -

Current service costXXX XXX XXX XXX XXX XXX XXX XXX

Remeasurement(gains)/losses

Actuarial gains andlosses arising fromchanges indemographicassumptions (XXX) (XXX) (XXX) (XXX) (XXX) (XXX) (XXX) (XXX)

Actuarial gains andlosses arising fromchanges in financialassumptions

(XXX) (XXX) (XXX) (XXX) (XXX) (XXX) (XXX) (XXX)

Past service cost � XXX XXX XXX XXX XXX XXX - -(Gains)/Losses on

settlements� (XXX) XXX (XXX) XXX (XXX) XXX XXX XXX

Contributions fromplan participants

- - - - - - XXX XXX

Liabilities extinguishedon settlements

- - (XXX) - (XXX) - - -

Benefits paid(XXX) (XXX) (XXX) (XXX) (XXX) (XXX) (XXX) (XXX)

Effects of businesscombinations anddisposal XXX (XXX) - - XXX (XXX) - -

Exchange differencesXXX XXX XXX XXX XXX XXX XXX XXX

At 31 December XXX XXX XXX XXX XXX XXX XXX XXX

FRS 19.140.a.iiFRS 19.141

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XYZ Holdings (Singapore) Limited

Appendix A-4 Defined benefit plans ��

XYZ Holdings (Singapore) Limited | 205

X. Defined benefit plan Ê (continued)

Changes in fair value of plan assets are as follow:

Funded pension plans

Singapore plan US plan Total

2015$’000

2014$’000

2015$’000

2014$’000

2015$’000

2014$’000

At 1 January XXX XXX XXX XXX XXX XXX

Interest income XXX XXX XXX XXX XXX XXX

Remeasurementgains/(losses)

Return on plan assets XXX XXX XXX XXX XXX XXX

Contributions by employer XXX - - - XXX -

Contributions from planparticipants XXX XXX XXX XXX - XXX

Benefits paid (XXX) (XXX) (XXX) (XXX) (XXX) (XXX)

Assets distributed onsettlements - - (XXX) - (XXX) -

Effects of businesscombinations and disposal XXX (XXX) - - XXX (XXX)

Exchange differences – – XXX (XXX) XXX (XXX)

At 31 December XXX XXX XXX XXX XXX XXX

Changes in the effect of the asset ceiling are as follow:

Funded pension plans

Singapore plan

2015$’000

2014$’000

At 1 January XXX -

Interest income XXX -

Remeasurement gains/(losses)

Changes in the effect oflimiting to asset ceiling1 (XXX) XXX

Exchange differences – –

At 31 December - XXX

1The maximum economic benefit available is a combination of expected refunds from the plan andreductions in future contributions.

FRS 19.140.a.iFRS 19.141

FRS 19.140.a.iiiFRS 19.141

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Appendix A-4 Defined benefit plans ��

XYZ Holdings (Singapore) Limited | 206

X. Defined benefit plan Ê (continued)

The fair value of plan assets by each classes as at the end of the reporting period are as follow:

Funded pension plansSingapore plan US plan Total

31 December2015$’000

31 December2014$’000

31 December2015$’000

31 December2014$’000

31 December2015$’000

31 December2014$’000

Cash and cash equivalents XXX XXX XXX XXX XXX XXX

Equity instruments- Manufacturing XXX XXX XXX XXX XXX XXX

- Financial institutions XXX XXX XXX XXX XXX XXX

- Telecommunications XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX

Debt instruments- Government securities XXX XXX XXX XXX XXX XXX

- AAA rated debt securities XXX XXX XXX XXX XXX XXX

- Not rated debt securities XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX

Property- Singapore XXX XXX XXX XXX XXX XXX

- Australia XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX

Derivatives- Interest rate swaps XXX XXX XXX XXX XXX XXX

- Forward currency contracts XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX

Asset-backed securities XXX XXX XXX XXX XXX XXX

Structured debts XXX XXX XXX XXX XXX XXX

Fair value of plan assets XXX XXX XXX XXX XXX XXX

All equity and debt instruments held have quoted prices in active market. The remaining plan assets do not have quoted market prices in active market.

The plan assets include a property occupied by a subsidiary of the Group with a fair value of $XXX (2014: $XXX) and ordinary shares of XYZ Holdings Limitedwith a fair value of $XXX (2014: $XXX).

FRS 19.142

FRS 19.143

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Appendix A-4 Defined benefit plans ��

XYZ Holdings (Singapore) Limited | 207

X. Defined benefit plan Ê (continued)

The cost of defined benefit pension plans and other post-employment medical benefits as wellas the present value of the pension obligation are determined using actuarial valuations. Theactuarial valuation involves making various assumptions. The principal assumptions used indetermining pension and post-employment medical benefit obligations for the defined benefitplans are shown below:

2015%

2014%

Discount rates:

Singapore plan/ post employment medical plan XX XX

US plan XX XX

Future salary increases:

Singapore plan XX XX

US plan XX XX

Future pension increases:

Singapore plan XX XX

US plan XX XX

Post retirement mortality for pensioners at 65:

Singapore plan/ post employment medical plan

Male XX XX

Female XX XX

US plan

Male XX XX

Female XX XX

Healthcare cost increase rate: XX XX

FRS 19.144

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Appendix A-4 Defined benefit plans ��

XYZ Holdings (Singapore) Limited | 208

X. Defined benefit plan Ê (continued)

The sensitivity analysis below has been determined based on reasonably possible changes ofeach significant assumption on the defined benefit obligation as of the end of the reportingperiod, assuming if all other assumptions were held constant:��

Increase/(decrease)

31 December 2015

SingaporePlan US Plan

Unfundedpost-

employmentmedicalbenefits

Discount rates +XX basis points (XXX) (XXX) (XXX)

- XX basis points XXX XXX XXX

Future salary increases +XX % XXX XXX XXX

- XX % (XXX) (XXX) (XXX)

Future pension increases +XX % XXX XXX XXX

- XX % (XXX) (XXX) (XXX)Post retirement mortality forpensioners at 65:

Male +XX % XXX XXX XXX

- XX % (XXX) (XXX) (XXX)

Female +XX % XXX XXX XXX

- XX % (XXX) (XXX) (XXX)

Healthcare cost increase rate +XX % XXX XXX XXX

- XX % (XXX) (XXX) (XXX)

The management performed an Asset-Liability Matching Study (ALM) annually. The principaltechnique of the Group’s ALM is to ensure the expected return on assets to be sufficient to supportthe desired level of funding arising from the defined benefit plans. The Group’s current strategicinvestment strategy consists of 50% of equity instruments, 30% of debt instruments, 15% ofinvestment properties and 5% of cash. The use of debt instruments in combination with interest rateswaps will reduce the sensitivities caused by the term of the defined benefit obligation by 25%.�

The Group’s defined benefit pension plans are funded by its subsidiaries. The employees of theGroup contribute 6% of the pensionable salary and the remaining residual contributions are paid bythe subsidiaries of the Group.�

The Group expects to contribute $XXX (2014: $XXX) to the defined benefit pension plans in 2015.

The average duration of the defined benefit obligation at the end of the reporting period is 18.4years (2014: 17.5 years).

FRS 19.145

FRS19.146

FRS19.147.a

FRS19.147.b

FRS19.147.c

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Appendix A-4 Defined benefit plans ��

XYZ Holdings (Singapore) Limited | 209

Commentary:

Ê To meet the disclosure objective of Revised FRS 19 for defined benefit plans, an entity shallconsider all the following:

(a) the level of detail necessary to satisfy the disclosure requirements,

(b) how much emphasis to place on each of the various requirements,

(c) how much aggregation or disaggregation to undertake; and

(d) whether users of financial statements need additional information to evaluate thequantitative information disclosed.

If the disclosures provided in accordance with the specific requirements of Revised FRS 19are insufficient to meet the objectives above, the entity shall disclose additional informationnecessary to meet those objectives. For example, an entity may present an analysis of thepresent value of defined benefit obligation that distinguishes the nature, characteristics andrisks of the obligation. Such a disclosure could distinguish:

- between amounts owing to active members, deferred members, and pensioners

- between vested benefits and accrued but not vested benefits

- between conditional benefits, amounts attributable to future salary increases and otherbenefits

An entity shall assess whether all or some disclosures should be disaggregated todistinguish plans or groups of plans with materially different risks. For example, an entitymay disaggregate disclosure about plans showing one or more of the following features:

- different geographical locations

- different characteristics such as flat salary pension plans, final salary pension plans orpost-employment medical plans

- different regulatory environments

- different reporting segments

- different funding arrangements (e.g. wholly unfunded, wholly or partly funded)

� When disclosing the characteristics of defined benefit plans and risks associated with them,an entity shall disclose:

(a) information about the characteristics including

- the nature of benefits provided by the plan (e.g. final salary defined benefit plan orcontribution-based plan with guarantee).

- a description of the regulatory framework in which the plan operates, for examplethe level of any minimum funding requirements, and any effect of the regulatoryframework on the plan, such as the asset ceiling.

- a description of any other entity’s responsibilities for the governance of the plan,for example responsibilities of trustees or of board members of the plan.

(b) a description of the risks to which the plan exposes the entity, focused on any unusualentity-specific or plan-specific risks, and of any significant concentrations of risk. Forexample, if plan assets are invested primarily in one class of investments, e.g. property,the plan may expose the entity to a concentration of property market risk.

(c) a description of any plan amendments, curtailments and settlements.

� An entity shall provide reconciliation from the opening balance to the closing balance forany reimbursement rights and the related obligation, if applicable.

FRS 19.136

FRS 19.137

FRS 19.138

FRS 19.139

FRS 19.140.b

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Appendix A-4 Defined benefit plans ��

XYZ Holdings (Singapore) Limited | 210

Commentary (continued):

Í Past service cost and gains and losses arising from settlements need not be distinguished ifthey occur together.

Î In the financial statements for periods beginning before 1 January 2014, an entity need notpresent comparative information for the disclosures about the sensitivity of the definedbenefit obligation.

Ï Revised FRS 19 introduces a number of new disclosure requirements. These include:

Sensitivity analysis

- A sensitivity analysis for each significant assumption as of the end of the reportingperiod, showing how the defined benefit obligation would have been affected bychanges in the relevant assumption that were reasonably possible at that date.

- The method and assumptions used in preparing the sensitivity analyses and thelimitation of those methods.

- Changes from the previous period in the methods and assumptions used in preparingthe sensitivity analyses, and the reasons for such changes.

Asset-liability matching strategies

- A description of any asset-liability matching strategies used by the plan or the entity,including the use of annuities and other techniques, such as longevity swaps, tomanage risk.

Cash flow information

- A description of any funding arrangements, and funding policy that affect futurecontributions to the defined benefit plan.

- Expected contributions to the plan for the next annual reporting period.

- Information about the maturity profile of the defined benefit obligation (including,but not limited to, weighted average duration of the defined benefit obligation).

Ð Multi-employer plans

In this illustration, we do not illustrate multi-employer plans. If the Group participates in amulti-employer plan and accounts for that plan as a defined benefit plan, it shall disclose thefollowing in addition to information required by paragraphs 135-147 of the Revised FRS 19:

(a) a description of the funding arrangements, including the method used to determine theentity’s rate of contributions and any minimum funding requirements.

(b) a description of the extent to which the entity can be liable to the plan for otherentities’ obligations under the terms and conditions of the multi-employer plan.

(c) a description of any agreed allocation of a deficit or a surplus on:

i. wind-up of the plan; or

ii. the entity’s withdrawal from the plan.

(d) if the entity accounts for that plan as if it were a defined contribution plan, it shalldisclose the following, in addition to the information required by (a) – (c) and instead ofthe information required by paragraph 139 to 147 of the Revised FRS 19:

i. the fact that the plan is a defined benefit plan.

ii. the reason why sufficient information is not available to enable the entity toaccount for the plan as a defined benefit plan.

FRS 19.141.d

FRS 19.173.b

FRS 19.145.a

FRS 19.145.b

FRS 19.145.c

FRS 19.146

FRS 19.147.a

FRS 19.147.b

FRS 19.147.c

FRS 19.33.b

FRS 19.148

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Appendix A-4 Defined benefit plans ��

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Commentary (continued):

� Multi-employer plans (continued)

iii. the expected contributions to the plan for the next annual reporting period.

iv. information about any deficit or surplus in the plan that may affect the amount offuture contributions, including the basis used to determine that deficit or surplusand the implications, if any, for the entity.

v. an indication of the level of participation of the entity in the plan compared withother participating entities. Examples of measures that might provide such anindication include the entity’s proportion of the total contributions to the plan orthe entity’s proportion of the total number of active members, retired members,and former members entitled to benefits, if that information is available.

Ñ Defined benefit plans that share risks between entities under common control

In this illustration, we do not illustrate defined benefit plans that share risks betweenentities under common control. If an entity participates in a defined benefit plan that sharesrisks between entities under common control, it shall disclose:

(a) the contractual agreement or stated policy for charging the net defined benefit cost orthe fact that there is no such policy.

(b) the policy for determining the contribution to be paid by the entity.

(c) if the entity accounts for an allocation of the net defined benefit cost as noted inparagraph 41 of Revised FRS 19�, all the information about the plan as a wholerequired by paragraph 135-147 of Revised FRS 19.

(d) if the entity accounts for the contribution payable for the period as noted in paragraph41 of Revised FRS 19�, the information about the plan as a whole required byparagraphs 135 – 137, 142 - 144 and 147 (a) and (b) of Revised FRS 19.

The information required by (c) and (d) can be disclosed by cross-reference to disclosures inanother group entity’s financial statements if:

(a) that group entity’s financial statements separately identify and disclose the informationrequired about the plan; and

(b) that group entity’s financial statements are available to users of the financialstatements on the same terms as the financial statements of the entity and at the sametime as, or earlier than, the financial statements of the entity.

Ò Paragraph 41 of Revised FRS 19 requires an entity participating in a defined benefit planthat share risks between entities under common control to obtain information about theplan as a whole measured in accordance with Revised FRS 19 on the basis of assumptionsthat apply to the plan as a whole. If there is a contractual agreement or stated policy forcharging to individual group entities the net defined benefit cost for the plan as a wholemeasured in accordance with Revised FRS 19, the entity shall, in its separate or individualfinancial statements, recognise the net defined benefit cost so charged. If there is no suchagreement or policy, the net defined benefit cost shall be recognised in the separate orindividual financial statements of the group entity that is legally the sponsoring employerfor the plan. The other group entities shall, in their separate or individual financialstatements, recognise a cost equal to their contribution payable for the period.

FRS 19.148

FRS 19.149

FRS 19.150

FRS 19.41

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XYZ Holdings (Singapore) Limited

Appendix B Illustrative new auditor’s report

XYZ Holdings (Singapore) Limited | 212

Independent Auditor’s Report to the Members of XYZ Holdings (Singapore) Limited (effective for annualperiod on or after 15 December 2016)

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of XYZ Holdings (Singapore) Limited (the “Company”) and itssubsidiaries (collectively, the “Group”), which comprise the balance sheets of the Group and the Companyas at 31 December 2016, the statements of changes in equity of the Group and the Company and theconsolidated income statement, consolidated statement of comprehensive income and consolidated cashflow statement of the Group for the year then ended, and notes to the financial statements, including asummary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements of the Group, the balance sheet andthe statement of changes in equity of the Company are properly drawn up in accordance with theprovisions of the Companies Act, Chapter 50 (the Act) and Financial Reporting Standards in Singapore(FRSs) so as to give a true and fair view of the consolidated financial position of the Group and the financialposition of the Company as at 31 December 2016 and of the consolidated financial performance,consolidated changes in equity and consolidated cash flows of the Group and changes in equity of theCompany for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with Singapore Standards on Auditing (SSAs). Our responsibilitiesunder those standards are further described in the Auditor’s Responsibilities for the Audit of the FinancialStatements section of our report. We are independent of the Group in accordance with the Accounting andCorporate Regulatory Authority (ACRA) Code of Professional Conduct and Ethics for Public Accountantsand Accounting Entities (ACRA Code) together with the ethical requirements that are relevant to our auditof the financial statements in Singapore, and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the ACRA Code. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in ouraudit of the financial statements of the current period. These matters were addressed in the context of ouraudit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide aseparate opinion on these matters.

[Description of each key audit matter in accordance with SSA 701]

Responsibilities of Management and Directors for the Financial Statements

Management is responsible for the preparation of financial statements that give a true and fair view inaccordance with the provisions of the Act and FRSs, and for devising and maintaining a system of internalaccounting controls sufficient to provide a reasonable assurance that assets are safeguarded against lossfrom unauthorised use or disposition; and transactions are properly authorised and that they are recordedas necessary to permit the preparation of true and fair financial statements and to maintain accountabilityof assets.

In preparing the financial statements, management is responsible for assessing the Group’s ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern and using thegoing concern basis of accounting unless management either intends to liquidate the Group or to ceaseoperations, or has no realistic alternative but to do so.

The directors’ responsibilities include overseeing the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditor’s report thatincludes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that anaudit conducted in accordance with SSAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

As part of an audit in accordance with SSAs, we exercise professional judgement and maintain professionalscepticism throughout the audit. We also:

SSA 700(R).21 and 22CA 207.1

SSA 700(R).44

SSA 700(R).23

SSA 700(R).24

SSA 700.25CA 207.2.a

SSA 700(R).28

SSA 700(R).30

SSA 700(R).32

SSA 700(R).33.a

SSA 700(R).33.b

SSA 700(R).34

SSA 700(R).36

SSA 700(R).37

SSA 700(R).38.a

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Appendix B Illustrative new auditor’s report

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Independent Auditor’s Report to the Members of XYZ Holdings (Singapore) Limited (effective for annualperiod on or after 15 December 2016)

Auditor’s Responsibilities for the Audit of the Financial Statements (Continued)

· Identify and assess the risks of material misstatement of the financial statements, whether due tofraud or error, design and perform audit procedures responsive to those risks, and obtain auditevidence that is sufficient and appropriate to provide a basis for our opinion. The risk of notdetecting a material misstatement resulting from fraud is higher than for one resulting from error,as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the overrideof internal control.

· Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Group’s internal control.

· Evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by management.

· Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists relatedto events or conditions that may cast significant doubt on the Group’s ability to continue as a goingconcern. If we conclude that a material uncertainty exists, we are required to draw attention in ourauditor’s report to the related disclosures in the financial statements or, if such disclosures areinadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up tothe date of our auditor’s report. However, future events or conditions may cause the Group to ceaseto continue as a going concern.

· Evaluate the overall presentation, structure and content of the financial statements, including thedisclosures, and whether the financial statements represent the underlying transactions and eventsin a manner that achieves fair presentation.

· Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the consolidated financial statements.We are responsible for the direction, supervision and performance of the group audit. We remainsolely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of theaudit and significant audit findings, including any significant deficiencies in internal control that we identifyduring our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirementsregarding independence, and to communicate with them all relationships and other matters that mayreasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of mostsignificance in the audit of the financial statements of the current period and are therefore the key auditmatters. We describe these matters in our auditor’s report unless law or regulation precludes publicdisclosure about the matter or when, in extremely rare circumstances, we determine that a matter shouldnot be communicated in our report because the adverse consequences of doing so would reasonably beexpected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company and bythose subsidiary corporations incorporated in Singapore of which we are the auditors have been properlykept in accordance with the provisions of the Act.

The engagement partner on the audit resulting in this independent auditor’s report is [Partner’s name].

[Signature]

_________________________

Ernst & Young LLP

Public Accountants andChartered AccountantsSingapore

[Date]

SSA 700(R).38.b.i

SSA 700(R).38.b.ii

SSA 700(R).38.b.iii

SSA 700(R).38.b.iv

SSA 700(R).38.b.v

SSA 700(R).38.c

SSA 700(R).39.a

SSA 700(R).39.b

SSA 700(R).39.c

SSA 700(R).42

CA 207.2.b

SSA 700(R).45

SSA 700(R).46

SSA 700(R).47

SSA 700(R).48

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Appendix C Comparison between FRS and IFRS

XYZ Holdings (Singapore) Limited | 214

and

ReferenceDescription

Aligned with IFRS?

Yes. No. Notes

Preface Preface to the Financial Reporting Standards PFramework Framework for the Preparation and Presentation of Financial

StatementsP

FRS 1 Presentation of Financial Statements PFRS 2 Inventories PFRS 7 Cash Flow Statements PFRS 8 Accounting Policies, Changes in Accounting Estimates and Errors PFRS 10 Events After the Reporting Period PFRS 11 Construction Contracts PFRS 12 Income Taxes P iFRS 16 Property, Plant and Equipment P �FRS 17 Leases PFRS 18 Revenue PFRS 19 Employee Benefits PFRS 20 Accounting for Government Grants and Disclosure of Government

AssistanceP

FRS 21 The Effects of Changes in Foreign Exchange Rates PFRS 23 Borrowing Costs PFRS 24 Related Party Disclosures PFRS 26 Accounting and Reporting by Retirement Benefit Plans PFRS 27 Separate Financial Statements P �FRS 28 Investments in Associates and Joint Ventures P �FRS 29 Financial Reporting in Hyperinflationary Economies PFRS 32 Financial Instruments: Presentation PFRS 33 Earnings Per Share PFRS 34 Interim Financial Reporting PFRS 36 Impairment of Assets PFRS 37 Provisions, Contingent Liabilities and Contingent Assets PFRS 38 Intangible Assets PFRS 39 Financial Instruments: Recognition and Measurement PFRS 40 Investment Property PFRS 41 Agriculture PFRS 101 First-Time Adoption of Financial Reporting Standards PFRS 102 Share-based Payment P �FRS 103 Business Combinations P �FRS 104 Insurance Contracts PFRS 105 Non-current Assets Held for Sale and Discontinued Operations PFRS 106 Exploration for and Evaluation of Mineral Resources PFRS 107 Financial Instruments: Disclosure PFRS 108 Operating Segments PFRS 109 Financial Instruments PFRS 110 Consolidated Financial Statements P

ËÎ

FRS 111 Joint Arrangements P Î

FRS 112 Disclosure of Interest in Other Entities P Î

FRS 113 Fair Value Measurement PFRS 114 Regulatory Deferral Accounts PFRS 115 Revenue from Contracts with Customers P

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Appendix C Comparison between FRS and IFRS

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Notes on differences between FRS and IFRS

� FRS 16 has a transitional provision which exempts an entity which had –

§ Revalued its property, plant and equipment before 1 January 1984; or

§ Performed any one-off revaluation on its property, plant and equipment between 1January 1984 and 31 December 1996 (both dates inclusive), from complying with therequirement to keep the valuation current by periodic valuation.

IAS 16 does not have such a transitional provision and therefore, all property, plant andequipment that had been revalued prior to adoption of IAS 16 would have to be revalued on aperiodic basis.

� One of the conditions for exemption from preparing consolidated financial statements or equityaccounting under IFRS 10 and IAS 28 is ‘the ultimate or any intermediate parent of the parentproduces consolidated financial statements available for public use that comply withInternational Financial Reporting Standards.’ The requirement that the consolidated financialstatements comply with IFRS is not required under FRS 110 and FRS 28.

� IFRS 3 applies to the accounting for business combinations for which the agreement date is onor after 31 March 2004.

FRS 103 is effective for annual periods beginning on or after 1 July 2004.

� FRS 102 is aligned with IFRS 2 except for the scope and the effective date for non-listedcompanies. IFRS 2 applies to grants of shares, share options or other equity instruments thatwere granted after 7 November 2002 and had not yet vested at the effective date of IFRS 2.However, the reference date in FRS 102 is 22 November 2002 instead of 7 November 2002.For non-listed companies, FRS 102 is effective only for financial periods beginning from 1January 2006 whereas IFRS 2 applies to all companies for financial periods beginning from 1January 2005.

� IFRS 10, IFRS 11, IFRS 12, Revised IAS 27 and Revised IAS 28 are effective for annual periodsbeginning on or after 1 January 2013. FRS 110, FRS 111, FRS 112, Revised FRS 27 andRevised FRS 28 are effective only for annual periods beginning on or after 1 January 2014.

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Appendix C Comparison between FRS and IFRS

XYZ Holdings (Singapore) Limited | 216

Recommended Accounting Practice (RAP) in Singapore

The following RAP issued by the Institute of Singapore Chartered Accountants set outrecommendations on accounting treatment relating to foreign income not remitted to Singapore.

i Foreign income not remitted to Singapore

The practice in Singapore is to recognise and account for a deferred tax liability in respect offoreign-sourced income not remitted to Singapore in the same way as temporary differencesassociated with investments in subsidiaries etc. as set out in accordance with FRS 12.39. Thus,some companies do not provide deferred tax in respect of foreign income on the basis that theydo not intend to remit the funds to Singapore in the foreseeable future.

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Appendix C Comparison between FRS and IFRS

XYZ Holdings (Singapore) Limited | 217

INT FRS vs. IFRIC Interpretations

Reference Description

Aligned with IFRICInterpretations

Yes. No. Notes

INT FRS 7 Introduction of the Euro P

INT FRS 10 Government Assistance – No Specific Relation to Operating Activities P

INT FRS 12 Consolidation – Special Purpose Entities P

INT FRS 13 Jointly Controlled Entities – Non-Monetary Contributions byVenturers

P

INT FRS 15 Operating Leases – Incentives P

INT FRS 21 Income Taxes – Recovery of Revalued Non-Depreciable Assets P

INT FRS 25 Income Taxes – Changes in the Tax Status of an Enterprise or itsShareholders

P

INT FRS 27 Evaluating the Substance of Transactions Involving the Legal Formof a Lease

P

INT FRS 29 Disclosure – Service Concession Arrangements P

INT FRS 31 Revenue – Barter Transactions Involving Advertising Services P

INT FRS 32 Intangible Assets - Web Site Costs P

INT FRS 101 Changes in Existing Decommissioning, Restoration and SimilarLiabilities

P

INT FRS 104 Determining Whether an Arrangement Contains a Lease P

INT FRS 105 Rights to Interests Arising from Decommissioning, Restoration andEnvironmental Rehabilitation Funds

P

INT FRS 106 Liabilities Arising from Participating in a Specific Market – WasteElectrical and Electronic Equipment

P

INT FRS 107 Applying the Restatement Approach under FRS 29 FinancialReporting in Hyperinflationary Economies

P

INT FRS 108 Scope of FRS 102 P

INT FRS 109 Reassessment of Embedded Derivatives P

INT FRS 110 Interim Financial Reporting and Impairment P

INT FRS 111 Group and Treasury Share Transactions P

INT FRS 112 Service Concession Arrangements P

INT FRS 113 Customer Loyalty Programmes P

INT FRS 114 FRS 19 - The Limit on a Defined Benefit Asset, Minimum FundingRequirements and their interaction

P

INT FRS 115 Agreements for the Construction of Real Estate P Ê

INT FRS 116 Hedges of a Net Investment in a Foreign Operation P

INT FRS 117 Distributions of Non-cash Assets to Owners P

INT FRS 118 Transfers of Assets from Customers P

INT FRS 119 Extinguishing Financial Liabilities with Equity Instruments P

INT FRS 120 Stripping Costs in the Production Phase of a Surface Mine P

INT FRS 121 Levies P

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Appendix C Comparison between FRS and IFRS

XYZ Holdings (Singapore) Limited | 218

Ê IFRIC 15 is effective for annual periods beginning on or after 1 January 2009. INT FRS 115 iseffective only for annual periods beginning on or after 1 January 2011.

INT FRS 115 includes an accompanying note on application of INT FRS 115 in Singapore. Theaccompanying note deals with the accounting treatment for revenue and associated expensesby housing developers who develop more than four units of private residential properties inSingapore for sale prior to completion of the properties. These developers are regulated underthe Singapore Housing Developers (Control and Licensing) Act (Chapter 130) and use thestandard form of the sales and purchase agreement prescribed in the schedule to the HousingDevelopers Rules.

� The following IFRIC Interpretation has not been adopted as INT FRS:

§ IFRIC 2 Members’ Shares in Co-operative Entities and Similar Instruments, effective forannual periods beginning on or after 1 January 2005

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XYZ Holdings (Singapore) Limited | 219

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