63
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2014
2.
Significant accounting policies
(continued)
2.16 Trade and other payables
Trade and other payables represent liabilities for goods and services provided to the Group prior to
the end of financial year which are unpaid. They are classified as current liabilities if payment is due
within one year or less (or in the normal operating cycle of the business if longer). Otherwise, they
are presented as non-current liabilities.
Trade and other payables are initially recognised at fair value, and subsequently carried at
amortised cost using the effective interest rate method.
2.17 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 that are 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 analysis, are also used to determine the fair values of the financial instruments.
The fair value of current financial assets and liabilities carried at amortised cost approximate their
carrying amounts.
2.18 Leases
(a)
When the Group is the lessee:
The Group leases motor vehicles and certain plant and machinery under finance leases and
land under operating leases from non-related parties.
(i)
Lessee – Finance leases
Leases 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.
(ii)
Lessee – Operating leases
Leases where substantially all risks and rewards incidental to ownership are retained
by the lessors are classified as operating leases. Payments made under operating
leases (net of any incentives received from the lessors) are recognised in profit or loss
on a straight-line basis over the period of the lease.
Contingent rents are recognised as an expense in profit or loss when incurred.
