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CORDLIFE GROUP LIMITED
| ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
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. 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 are discussed below. The Group based its assumptions and estimates
on parameters available when the financial statements were 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 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 recognised arising from these contracts would have been $1,729,000 (2014: $1,414,000) lower.
Allowance for impairment loss on trade receivables
Where receivables are outstanding beyond the normal trading terms, the likelihood of the recovery of
these receivables is assessed by management. Due to the large number of debtors, this assessment is
based on supportable past collection history and historical write-offs of bad debts. In addition, there
are credit control departments in place within the Group to perform recovery procedures and bad debt
assessment on a regular and structured basis. When there is objective evidence that an impairment loss
on the receivables has been incurred, appropriate allowances for impairment loss or write-off of trade
receivables will be made. Details of the impairment loss allowance are outlined in Note 17.
