notes to the
financial statements
31 December 2015
2.
Summary of significant accounting policies (cont’d)
Financial assets
A financial asset is recognised on the statement of financial position when, and only when, the Group becomes a
party to the contractual provisions of the instrument. The initial recognition of financial assets is at fair value normally
represented by the transaction price. The transaction price for financial asset not classified at fair value through profit
or loss includes the transaction costs that are directly attributable to the acquisition or issue of the financial asset.
Transaction costs incurred on the acquisition or issue of financial assets classified at fair value through profit or loss are
expensed immediately. The transactions are recorded at the trade date.
Irrespective of the legal form of the transactions performed, financial assets are derecognised when they pass the
“substance over form” based on the derecognition test prescribed by FRS 39 Financial Instruments: Recognition and
Measurement relating to the transfer of risks and rewards of ownership and the transfer of control. Financial assets and
financial liabilities are offset and the net amount is reported in the statement of financial position if there is currently a
legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, to realise
the assets and settle the liabilities simultaneously.
The Group’s financial assets include loans and receivables, held-to-maturity financial assets and available-for-sale
financial assets. Subsequent measurement of the financial assets is as follows:
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. Assets that are for sale immediately or in the near term are not classified in this category. These
assets are carried at amortised costs using the effective interest method (except that short-duration receivables with
no stated interest rate are normally measured at original invoice amount unless the effect of imputing interest would be
significant) minus any reduction (directly or through the use of an allowance account) for impairment or uncollectibility.
Impairment charges are provided only when there is objective evidence that an impairment loss has been incurred as a
result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or
events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be
reliably estimated. The methodology ensures that an impairment loss is not recognised on the initial recognition of an
asset. For impairment, the carrying amount of the asset is reduced through use of an allowance account. The amount
of the loss is recognised in profit or loss. An impairment loss is reversed if the reversal can be related objectively to an
event occurring after the impairment loss was recognised. Typically, trade and other receivables and cash and cash
equivalents are classified in this category.
Held-to-maturity financial assets
These are non-derivative financial assets with fixed or determinable payments and fixed maturity that the Group has
the positive intention and ability to hold to maturity. Financial assets that upon initial recognition are designated as at
fair value through profit or loss or available-for-sale and those that meet the definition of loans and receivables are not
classified in this category. These assets are carried at amortised costs using the effective interest method minus any
reduction (directly or through the use of an allowance account) for impairment or uncollectibility. Impairment charges
are provided only when there is objective evidence that an impairment loss has been incurred. For impairment, the
carrying amount of the asset is reduced through use of an allowance account. The gains and losses are recognised
in profit or loss when the investments are derecognised or impaired, as well as through the amortisation process.
Impairment losses recognised in profit or loss are subsequently reversed if an increase in the fair value of the instrument
can be objectively related to an event occurring after the recognition of the impairment loss. Non-current investments
in bonds and debt securities are usually classified in this category.
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