| ANNUAL REPORT 2015
114
NOTES TO THE FINANCIAL STATEMENTS
30 June 2015 (cont’d)
4. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
4.11 Financial instruments (cont’d)
(b) Financial liabilities (cont’d)
(ii) Other financial liabilities
Financial liabilities classified as other financial liabilities comprise non-derivative financial liabilities that are
neither held for trading nor initially designated as at fair value through profit or loss.
Subsequent to initial recognition, other financial liabilities are measured at amortised cost using the effective
interest method. Gains or losses on other financial liabilities are recognised in profit or loss when the financial
liabilities are derecognised and through the amortisation process.
A financial liability is derecognised when, and only when, it is extinguished, i.e. when the obligation specified in
the contract is discharged or cancelled or expires. An exchange between an existing borrower and lender of debt
instruments with substantially different terms are accounted for as an extinguishment of the original financial
liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an
existing financial liability is accounted for as an extinguishment of the original financial liability and the recognition
of a new financial liability.
Any difference between the carrying amount of a financial liability extinguished or transferred to another party and
the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or
loss.
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the
holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the
original or modified terms of a debt instrument.
The Group designates corporate guarantees given to banks for credit facilities granted to subsidiaries as insurance
contracts as defined in MFRS 4
Insurance Contracts
. The Group recognises these insurance contracts as recognised
insurance liabilities when there is a present obligation, legal or constructive, as a result of a past event, when it is
probable that an outflow of resources embodying economic benefits would be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
At the end of each reporting period, the Group assesses whether its recognised insurance liabilities are adequate,
using current estimates of future cash flows under its insurance contracts. If this assessment shows that the carrying
amount of the insurance liabilities is inadequate, the entire deficiency shall be recognised in profit or loss.
Recognised insurance liabilities are only removed from the statement of financial position when, and only when, it
is extinguished via a discharge, cancellation or expiration.
(c) Equity
An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company
after deducting all of its liabilities. Ordinary shares are classified as equity instruments.
Ordinary shares are recorded at the nominal value and proceeds in excess of the nominal value of shares issued,
if any, are accounted for as share premium. Both ordinary shares and share premium are classified as equity.
Transaction costs of an equity transaction are accounted for as a deduction from equity, net of any related income
tax benefit. Otherwise, they are charged to profit or loss.
