Asiaone 1-42

(iv) Fixed assets
FINANCIAL STATEMENTS
2. Basis of preparation of the proforma financial statements (cont’d)
Fixed assets are attributed to those assets employed by the Multimedia division and
also by reference to the assets transferred to the Company under the Business Transfer
Agreement dated November 25, 1999.
(v) Trade creditors
Trade creditors mainly relate to accruals for staff related costs such as bonus, salary
and central provident fund contributions. These accruals were identified by reference to
the relevant personnel who were employed in the Multimedia division.
(vi) Due to holding company
Due to holding company represents the net funding provided by SPH, and is a balancing
figure in the Company’s proforma balance sheets.
(c) Statement of Changes in Shareholders’ Equity
The accumulated losses of the Multimedia division prior to the transfer of the business to
the Company are taken as having been absorbed by the holding company, SPH.
(d) Statements of Cash Flows
The statements of cash flows have been prepared using the indirect method. Accordingly,
these statements are derived from the proforma profit and loss accounts and balance
sheets prepared on the basis set out in paragraphs 2(a) and 2(b) above.
(e) For the convenience of the reader, the Company’s unaudited profit and loss accounts and
cash flows for the six-month period ended February 28, 1999 have been included for
comparative purposes.
3. Significant accounting policies
(a) Basis of accounting
The proforma financial statements of the Company, expressed in Singapore dollars, are
prepared under the historical cost convention and in accordance with Singapore Statements
of Accounting Standard.
(b) Basis of consolidation
The consolidated financial statements include the financial statements of the Company and
its subsidiaries made up to the end of the financial year. The results of the subsidiaries
acquired or disposed during the year are included in or excluded from the consolidated
profit and loss account from the date of their acquisition or disposal. Inter-company balances
and transactions are eliminated on consolidation and the consolidated financial statements
reflect external transactions only.
125