Critical Accounting Policies

As required by the Companies Act, the Group's and Company's financial statements have been prepared in accordance with Singapore Financial Reporting Standards. The following are the critical accounting policies:

Revenue and Profit Recognition

Revenue and profit on partly completed projects which are held for sale are recognized on the percentage of completion basis. For Singapore trading properties, profit recognition upon signing of sales contracts is 20% of the total estimated profit attributable to the actual contracts signed. Subsequent profit recognition is based on the stage of physical completion. For overseas trading properties, profit recognition during development is the direct proportion of total expected project profit attributable to the actual sales contracts signed, but only to the extent that is related to the stage of completion.

The more conservative percentage of completion basis for overseas trading properties is appropriate as the markets there are less matured and risks are greater. In respect of large trading projects both in Singapore and overseas, the percentage of completion method is applied on a phase by phase basis (i.e. one phase for every part of a project with one temporary occupation permit).

Leasehold Properties

The applicable accounting standard requires all leases to be depreciated over their lives. However, the Group does not depreciate leasehold properties with unexpired tenures of over 20 years. These leasehold properties are instead valued by professional valuers or in-house valuers at each balance sheet date, and are assessed as to whether there is impairment in their carrying values. The impairment in value, if any, is taken to the profit and loss account in the absence of or to the extent that it exceeds any surplus held in reserves relating to previous revaluations. This accounting policy is considered more appropriate in reflecting their values and any decline in the accounts.

Financial Instruments: Recognition and Measurement

The effect of recognition, derecognition and measurement of financial instruments, for periods prior to 1 January 2005, is not restated. As a result, the comparative figures for 2004 have not been restated, and a transitional adjustment was made on 1 January 2005 instead.

In accordance with the transitional rules, there is no restatement for the profit and loss accounts of the Group and the Company in 2004.

Business Combinations

Under the relevant reporting standard, assets and liabilities of subsidiaries which the Group acquired during the year were stated at their fair values at the dates of acquisition.