62
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2014
2.
Significant accounting policies
(continued)
2.12 Financial assets
(continued)
(d)
Impairment
(continued)
(ii)
Available-for-sale financial assets
In addition to the objective evidence of impairment described in Note 2.12(d)(i), a
significant or prolonged decline in the fair value of an equity security below its cost is
considered as an indicator that the available-for-sale financial asset is impaired.
If any evidence of impairment exists, the cumulative loss that was previously
recognised in other comprehensive income is reclassified to profit or loss. The
cumulative loss is measured as the difference between the acquisition cost (net of any
principal repayments and amortisation) and the current fair value, less any impairment
loss previously recognised as an expense. The impairment losses recognised as an
expense on equity securities are not reversed through profit or loss.
2.13 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when
there is a legally enforceable right to offset and there is an intention to settle on a net basis or
realise the asset and settle the liability simultaneously.
2.14 Financial guarantees
The Company has issued corporate guarantees to banks for borrowings of its subsidiaries. These
guarantees are financial guarantees as they require the Company to reimburse the banks if the
subsidiaries fail to make principal or interest payments when due in accordance with the terms of
their borrowings.
Financial guarantees are initially recognised at their fair values plus transaction costs in the
Company’s balance sheet.
Financial guarantees are subsequently amortised to profit or loss over the period of the
subsidiaries’ borrowings, unless it is probable that the Company will reimburse the bank for an
amount higher than the unamortised amount. In this case, the financial guarantees shall be carried
at the expected amount payable to the bank in the Company’s balance sheet.
Intra-group transactions are eliminated on consolidation.
2.15 Borrowings
Borrowings are presented as current liabilities unless the Group has an unconditional right to defer
settlement for at least 12 months after the balance sheet date, in which case they are presented as
non-current liabilities.
Borrowings are initially recognised at fair value (net of transaction costs) and subsequently
carried at amortised cost. Any difference between the proceeds (net of transaction costs) and the
redemption value is recognised in profit or loss over the period of the borrowings using the effective
interest method.
