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Annual Report 2014 | S P SETIA BERHAD GROUP | 129

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 October 2014

V. FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(q) Impairment of assets (cont’d)

(iii) Property, plant and equipment, investment properties, concession assets, land held for property development and investments

in subsidiary companies, associated companies and jointly controlled entities

Property, plant and equipment, investment properties, concession assets, land held for property development and investments

in subsidiary companies, associated companies and jointly controlled entities are assessed at each reporting date to determine

whether there is any indication of impairment.

If such an indication exists, the asset’s recoverable amount is estimated. The recoverable amount is the higher of an asset’s

fair value less cost to sell and its value in use. Value in use is the present value of the future cash flows expected to be derived

from the asset. Recoverable amounts are estimated for individual assets or, if it is not possible, for the cash-generating unit to

which the asset belongs.

An impairment loss is recognised whenever the carrying amount of an asset or a cash-generating unit exceeds its recoverable

amount. Impairment losses are charged to profit or loss immediately.

Any reversal of an impairment loss as a result of a subsequent increase in recoverable amount should not exceed the carrying

amount that would have been determined (net of amortisation or depreciation, if applicable) had no impairment loss been

previously recognised for the asset. Such reversals are recognised as income immediately in profit or loss.

(r) Share capital and Sukuk Musharakah (“Perpetual bond”)

Ordinary shares and Perpetual bond are classified as equity when there is no contractual obligation to deliver cash or other financial

assets to another person or entity or to exchange financial assets or liabilities with another person or entity that are potentially

unfavourable to the issuer.

Ordinary shares are recorded at nominal value and proceeds received in excess, if any, of the nominal value of shares issued, are

accounted for as share premium. Share premium are classified as equity. Costs incurred directly attributable to the issuance of the

shares are accounted for as a deduction from share premium, if any, otherwise it is charged to profit or loss.

The proceeds received net of any directly attributable transaction costs are credited to share capital or perpetual capital securities.

Dividends on ordinary shares and distribution on Perpetual bond are recognised in equity in the period in which they are declared.

(s) Redeemable cumulative preference shares

Redeemable cumulative preference shares (“RCPS”) are classified as financial liabilities in accordance with the substance of the

contractual arrangement of the RCPS. Dividends to shareholders of the RCPS are recognised as finance costs, on an accrual basis.

RCPS are measured at amortised cost.

(t) Income recognition

(i) Revenue from construction contracts and sale of development properties which are under development is recognised on the

percentage of completion method, where the outcome of the contracts and development projects can be reliably estimated.

Revenue from construction contracts represents the proportionate contract value on construction contracts attributable to the

percentage of contract work performed during the financial year.

Revenue from the sale of development properties represents the proportionate sales value of development properties sold

attributable to the percentage of development work performed during the financial year.