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78 CORDLIFE GROUP LIMITED
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the Financial Year ended 30 June 2014
2. Summary of significant accounting policies (cont’d)
2.29 Related parties (cont’d)
(b) An entity is related to the Group and the Company if any of the following conditions applies : (cont’d)
(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity;
(v) The entity is a post-employment benefit plan for the benefit of employees of either the Company or an
entity related to the Company. If the Company is itself such a plan, the sponsoring employers are also
related to the Company;
(vi) The entity is controlled or jointly controlled by a person identified in (a);
(vii) A person identified in (a) (i) has significant influence over the entity or is a member of the key
management personnel of the entity (or of a parent of the entity).
3. Significant accounting judgements, estimates and assumptions
The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent
liabilities at the end of each reporting period. However, uncertainty about these assumptions and estimates could result in
outcomes that require a material adjustment to the carrying amount of the asset or liability affected in the future periods.
3.1 Judgements made in applying accounting policies
In the process of applying the Group’s accounting policies, management is of the opinion that there is no instance of
application of judgement which is expected to have a significant impact on the amounts recognised in the consolidated
financial statements, apart from those involving estimations described below.
3.2 Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting
period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year are discussed below. The Group based its assumptions and estimates on parameters
available when the financial statements was prepared. Existing circumstances and assumptions about future
developments, however, may change due to market changes or circumstances arising beyond the control of the Group.
Such changes are reflected in the assumptions when they occur.
Revenue recognition
The Group recognises revenue from cord blood banking service contracts and umbilical cord lining banking services
based on the stage of completion method. The stage of completion is measured in accordance with the accounting
policy stated in Note 2.22. Significant assumptions and estimates are required in determining the total estimated costs.
In making the assumptions, the Group evaluates them by relying on past experience and evidence. Any significant
change in the estimated costs over the remaining period would have a significant impact on the revenue recognised.
An increase/decrease in estimated storage costs over the remaining contract period would reduce/increase the stage
of completion to date, and hence would reduce/increase the revenue recognised in the current period.
If the total estimated storage costs had been 5% higher than management’s current estimate, the total revenue
recognized arising from these contracts would have been $1,414,000 (2013: $927,000) lower.