2018 UEM Edgenta Annual Report

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D.) 2.3 Standards issued but not yet effective (cont’d.) MFRS 16: Leases (cont’d.) The Group plans to adopt MFRS 16 using the modified retrospective method. Accordingly, the Group will not restate the comparative information, differences arising from the adoption of MFRS 16 will be recognised directly in retained earnings. The Group will elect to apply the standard to contracts that were previously identified as leases applying MFRS 117 and IC Interpretation 4. The Group will therefore not apply the standard to contracts that were not previously identified as containing a lease applying MFRS 117 and IC Interpretation 4. The Group will elect to use the exemptions proposed by the standard on lease contracts for which the lease terms ends within 12 months as of the date of initial application, and lease contracts for which the underlying asset is of low value. The Group has leases of certain office equipment (i.e., personal computers, printing and photocopying machines) that are considered of low value. Based on the Group’s initial assessment, the Group expects to recognise right-of-use assets for buildings and the corresponding lease liabilities for its non-cancellable operating lease. However, the Group does not anticipate the application of MFRS 16 to have a significant impact on the Group’s financial statements. The Group is finalising its assessment of the financial effects of the adoption of MFRS 16. 2.4 Summary of significant accounting policies (a) Basis of consolidation and subsidiaries (i) Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied for like transactions and events in similar circumstances. The Company controls an investee if and only if the Company has all the following: (i) Power over the investee (i.e existing rights that give it the current ability to direct the relevant activities of the investee); (ii) Exposure, or rights, to variable returns from its involvement with the investee; and (iii) The ability to use its power over the investee to affect its returns. When the Company has less than a majority of the voting rights of an investee, the Company considers the following in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power over the investee: (i) The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders; (ii) Potential voting rights held by the Company, other vote holders or other parties; (iii) Rights arising from other contractual arrangements; and (iv) Any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings. Subsidiaries are consolidated when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full. Losses within a subsidiary are attributed to the non-controlling interests even if that results in a deficit balance. Financial Review Stakeholder Information AGM Information 161 Governance Review of Sustainability Activities