perspective perspective - ChartNexus

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1 PRINCIPAL ACTIVITIES
The principal activities of the Company are investment holding and the provision of management services.
The principal activities of the subsidiary companies of the Group are as stated in Note 13 to the financial statements.
There were no significant changes in the nature of these activities during the financial year.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies have been used consistently in dealing with items which are considered material in relation to
the financial statements.
(a) Basis of preparation
The financial statements of the Group and Company have been prepared under the historical cost convention (as modified
to include the revaluation of certain property, plant and equipment and investment in subsidiary companies), unless
otherwise indicated in this summary of significant accounting policies.
The financial statements comply with Malaysian Accounting Standards Board (“MASB”) approved accounting standards in
Malaysia and the provisions of Companies Act, 1965.
The preparation of the financial statements in conformity with MASB approved accounting standards in Malaysia and the
provisions of Companies Act, 1965 requires the Directors to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reported financial year. Although these estimates are based
on the Directors’ best knowledge of current events and actions, actual results may differ from these estimates.
(b) Basis of consolidation
NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2005
The consolidated financial statements include the financial statements of the Company and all its subsidiary companies
made up to the end of the financial year. Subsidiary companies are those companies in which the Group has power to
exercise control over the financial and operating policies so as to obtain benefits from their activities.
Subsidiary companies are consolidated using the acquisition method of accounting except for a subsidiary company
(as disclosed in Note 13 to the financial statements) which was accounted for using the merger method of accounting.
The subsidiary was consolidated prior to 1 January 2002 in accordance with Malaysian Accounting Standard No. 2
“Accounting for Acquisitions and Mergers”, the generally accepted accounting principle prevailing at that time.
The Group has used the exemption provided by Financial Reporting Standard (“FRS”) 1222004 “Business Combinations”
(formerly known as MASB 21) to apply this Standard prospectively. Accordingly, business combinations entered into prior
to 1 January 2002 have not been restated to comply with this Standard.
Under the acquisition method of accounting, subsidiary companies are consolidated from the date control is transferred to
the Group and are no longer consolidated from the date that control ceases. The results of subsidiary companies acquired
or disposed of during the financial year are included from the date of acquisition up to the date of disposal. At the date of
acquisition, the fair values of the subsidiary companies’ net assets are determined and these values are reflected in the
consolidated financial statements. The difference between the cost of acquisition over the fair values of the Group’s share
of the subsidiary companies’ identifiable net assets at the date of acquisition is reflected as goodwill or negative goodwill.
See accounting policy Note 2(d) on goodwill on consolidation. The cost of acquisition is the amount of cash paid and the
fair value at the date of acquisition of other purchase consideration together with directly attributable expenses of
the acquisition.
Under the merger method of accounting, the results of the subsidiary companies are presented as if the merger had been
effected throughout the current and previous financial years. The cost of investment in a merger is recorded at the
aggregate of the nominal value of equity shares issued, cash and cash equivalents and fair values of other considerations.
Expenditure incurred in connection with the merger is recognised as an expense in the income statement. On consolidation,
the cost of the merger is cancelled with the nominal values of the shares received. The excess of the carrying value of the
investment over the nominal value of the shares acquired is treated as a reduction of reserves, whereas an excess of the
nominal value of the shares acquired over the carrying value of the investment is treated as reserve arising on merger and
included as part of shareholders’ equity.