Megachem Limited Annual Report 2015 124 Notes to the Financial Statements 31 December 2015 29. Related party transactions 29A. Related companies and related parties FRS 24 defines a related party is an entity or person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common or joint control with, the entity in governing the financial and operating policies, or that has an interest in the entity that gives it significant influence over the entity in financial and operating decisions. It also includes members of the key management personnel or close members of the family of any individual referred to herein and others who have the ability to control, jointly control or significantly influence or for which significant voting power in such entity resides with, directly or indirectly, any such individual. The definition includes parents, subsidiaries, fellow subsidiaries, associates, joint ventures and post-employment benefit plans, if any. Related companies in these financial statements include the members of the Company’s group of companies. There are transactions and arrangements between the reporting entity and members of the Group and the effects of these on the basis determined between the parties are reflected in these financial statements. The current intercompany balances are unsecured without fixed repayment terms and interest unless stated otherwise. For any significant non-current balances and significant financial guarantees, an interest or charge is charged or imputed unless stated otherwise. Intragroup transactions and balances that have been eliminated in these consolidated financial statements are not disclosed as related party transactions and balances below. In addition to the transactions and balances disclosed elsewhere in the notes to the financial statements, significant transactions took place between the Group and related parties during the reporting year: 2015 2014 $ $ Group Associated companies Sale of inventories 801,821 853,966 Purchases of inventories (84,383) (90,358) Providing services – 4,659 Related parties Sale of inventories (a) 5,090 3,479 Purchases of inventories (a)(b) (838,428) (259,519) Receiving transportation services (c) (95,681) (127,652) (a) Sales and purchases of inventories from Chori Co., Ltd, a controlling shareholder of the Company, and its related companies. (b) Purchases of inventories from SPCI Pte. Ltd., a company who has a common director with the Company. (c) Transportation services rendered by Ipem Automation Sdn. Bhd., a company owned by associates of a director of the Company.
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