MIIF and its wholly owned subsidiaries (the Group) have adopted International Financial Reporting Standards (IFRS) as a basis for preparation of its financial statements. The preparation of financial statements in conformity with IFRS requires the use of accounting estimates. It also requires management to exercise judgement when applying the Group’s accounting policies.

The Group’s investments are classified as financial assets. In accordance with the applicable IFRS, these financial assets are held at fair value, with changes in the fair values of these assets reflected as revaluation income in the income statement in the period in which they arise.

The fair value of those financial assets that are listed, or whose prices are public, is determined by reference to the last quoted market price of that security at the balance sheet date. In 2009, MIIF held no listed investments.

The values of those financial assets that are unlisted, or whose prices are not publicly quoted, are determined by the manager using established valuation techniques. The manager utilises a variety of these established valuation techniques and makes assumptions that are based on market conditions at each balance sheet date that form the basis of these valuations. The established valuation techniques adopted by the manager will be based on one or more of the following valuation methods: 

• discounted cash flows
• capitalisation of earnings analysis, such as EBITDA multiple analysis
• valuation of similar investments
• reference to recent sales transactions of the same or similar securities
• other methods as determined by the manager.

The manager calculates the fair value of each asset at the end of each calendar quarter and adjusts the carrying value of each investment to match the valuation generated by the manager. This process of “marking to market” the value of the Group’s investments generates revaluation gains and losses, reported as a net gain or loss on financial assets at fair value through profit and loss. The updated asset valuations feed into the balance sheet of the Group at each calendar quarter end and are reported to the SGX in accordance with the SGX listing rules. This is included in the same report as the quarterly net asset value per share disclosure amongst other items.

The half year and full year updated asset valuations generated by the manager are subjected to review and endorsement by MIIF’s independent auditors, the MIIF audit and risk committee and MIIF board.