NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2014
Financial Statements
97
Annual Report 2014
2.
Significant accounting policies
(continued)
2.15 Derivative financial instruments and hedging activities
(continued)
The Group documents at the inception of the transaction the relationship between hedging instruments
and hedged items, as well as its risk management objective and strategies for undertaking various hedge
transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis,
on whether the derivatives designated as hedging instruments are highly effective in offsetting changes in
fair values or cash flows of the hedged items.
The carrying amount of a derivative designated as a hedge is presented as a non-current asset or liability if
the remaining expected life of the hedged item is more than 12 months, and as a current asset or liability if
the remaining expected life of the hedged item is less than 12 months. The fair value of a trading derivative
is presented as a current asset or liability.
Fair value hedge
The Group has not designated any derivatives as hedging instruments during the financial year.
2.16 Fair value estimation of financial assets and liabilities
The fair values of financial instruments traded in active markets (such as exchange-traded and over-the-
counter securities and derivatives) are based on quoted market prices at the balance sheet date. The
quoted market prices used for financial assets are the current bid prices; the appropriate quoted market
prices for financial liabilities are the current asking prices.
The fair values of financial instruments that are not traded in an active market are determined by using
valuation techniques. The Group uses a variety of methods and makes assumptions based on market
conditions existing at each balance sheet date. Where appropriate, quoted market prices or dealer quotes
for similar instruments are used. Valuation techniques, such as discounted cash flow analyses, are also
used to determine the fair values of the financial instruments. However, if the range of reasonable fair value
measurements is significant and the probabilities of the various estimates cannot be reasonably assessed,
the Group is precluded from measuring the instruments at fair value.
The fair values of forward currency contracts are determined using actively quoted forward exchange rates.
The fair values of current financial assets and liabilities carried at amortised cost approximate their carrying
amounts.
2.17 Leases
(a)
When the Group is the lessee:
The Group leases certain property, plant and equipment from non-related parties.
(i)
Lessee - Finance leases
Leases of property, plant and equipment where the Group assumes substantially all risks and
rewards incidental to ownership of the leased assets are classified as finance leases.
The leased assets and the corresponding lease liabilities (net of finance charges) under
finance leases are recognised on the balance sheet as property, plant and equipment and
borrowings respectively, at the inception of the leases based on the lower of the fair value of
the leased assets and the present value of the minimum lease payments.
Each lease payment is apportioned between the finance expense and the reduction of the
outstanding lease liability. The finance expense is recognised in profit or loss on a basis that
reflects a constant periodic rate of interest on the finance lease liability.
