110
ANNUAL REPORT 2016
NOTES TOTHE FINANCIAL STATEMENTS
30 JUNE 2016
(Continued)
6.
SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
6.1 Changes in estimates
Estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events
that are believed to be reasonable under the circumstances. The Directors are of the opinion that there are no significant changes in
estimates at the end of the reporting period.
6.2 Critical judgements made in applying accounting policies
The following are judgements made by management in the process of applying the accounting policies of the Group that have the
most significant effect on the amounts recognised in the financial statements.
(a)
Classification between investment properties and property, plant and equipment
The Group has developed certain criteria based on MFRS 140
Investment Property
in making judgement whether a property
qualifies as an investment property. Investment property is a property held to earn rentals or for capital appreciation or both.
Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for
use in the production or supply of goods or services or for administrative purposes. If these portions could be sold separately (or
leased out separately under a finance lease), the Group would account for the portions separately. If the portions could not be
sold separately, the property is an investment property only if an insignificant portion is held for use in the production or supply
of goods or services or for administrative purposes. Judgement is made on an individual property basis to determine whether
ancillary services are so significant that a property does not qualify as investment property.
(b)
Classification of leasehold land
The Group has assessed and classified land use rights of the Group as finance leases based on the extent to which risks and
rewards incidental to ownership of the land resides with the Group arising from the lease term. Consequently, the Group has
classified the unamortised upfront payment for land use rights as finance leases in accordance with MFRS 117
Leases
.
(c)
Contingent rental
The Group has entered into tenancy agreements for the lease of boutiques, which contain contingent rental features based
on predetermined revenue thresholds. The Group has determined that these contingent rental features are not embedded
derivatives to be separately accounted for due to the economic characteristics and risks of these contingent rental features are
closely related to the economic characteristics and risks of the underlying tenancy agreements. There are no leverage features
contained within these contingent rental features.
(d)
Contingent liabilities
The determination of treatment of contingent liabilities is based on management’s view of the expected outcome of the
contingencies for matters in the ordinary course of business.
(e)
Classification of non-current bank borrowings
Term loan agreements entered into by the Group include repayment on demand clauses at the discretion of financial institutions.
The Group believes that in the absence of a default being committed by the Group, these financial institutions are not entitled
to exercise its right to demand for repayment. Accordingly, the carrying amount of the term loans have been classified between
current and non-current liabilities based on their repayment period.
(f)
Contingent liabilities on corporate guarantees
The Directors are of the view that the chances of the financial institutions to call upon the corporate guarantees are remote.
(g) Non-current assets classified as held for sale
Certain non-current assets as disclosed in Note 17 to the financial statements have been classified as held for sale as the
management has committed to a plan to sell the assets as at the end of each reporting period. The sale of the assets had been
completed subsequent to the financial year ended 30 June 2016.
