Positioning for the Future | 125
Appendix
Notes to the Financial Statements
Year ended 31 December 2014
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(cont’d)
2.8 Financial instruments
(cont’d)
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(cont’d)
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The Group initially recognises debt securities issued and subordinated liabilities on the date that they are
originated. Financial liabilities for contingent consideration payable in a business combination are recognised
at the acquisition date. All other mnancial liabilities (including liabilities designated at fair value through promt
or loss) are recognised initially on the trade date, which is the date that the Group becomes a party to the
contractual provisions of the instrument.
The Group derecognises a mnancial liability when its contractual obligations are discharged, cancelled or
expired.
Financial liabilities for contingent consideration payable in a business combination are initially measured at fair
value. Subsequent changes in the fair value of the contingent consideration are recognised in promt or loss.
Financial assets and liabilities are offset and the net amount presented in the statement of mnancial position
when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net
basis or to realise the asset and settle the liability simultaneously.
The Group classifies non-derivative financial liabilities under the other financial liabilities category.
Such mnancial liabilities are recognised initially at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, these mnancial liabilities are measured at amortised cost using the effective
interest rate method.
Other mnancial liabilities comprise loans, borrowings and trade and other payables.
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The Group holds derivative mnancial instruments to hedge its foreign currency and interest rate risk exposures.
Embedded derivatives are separated from the host contract and accounted for separately if the economic
characteristics and risks of the host contract and the embedded derivative are not closely related, a separate
instrument with the same terms as the embedded derivative would meet the demnition of a derivative, and
the combined instrument is not measured at fair value through promt or loss.
On initial designation of the derivative as the hedging instrument, the Group formally documents the relationship
between the hedging instrument and hedged item, including the risk management objectives and strategy
in undertaking the hedge transaction and the hedged risk, together with the methods that will be used to
assess the effectiveness of the hedging relationship. The Group makes an assessment, both at the inception
of the hedge relationship as well as on an ongoing basis, of whether the hedging instruments are expected
to be highly effective in offsetting the changes in the fair value or cash nows of the respective hedged
items attributable to the hedged risk, and whether the actual results of each hedge are within a range of
80%-125%. For a cash now hedge of a forecast transaction, the transaction should be highly probable to occur
and should present an exposure to variations in cash nows that could ultimately affect reported promt or loss.
Derivatives are recognised initially at fair value; attributable transaction costs are recognised in the promt or
loss when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes
therein are accounted for as described below.
