Annual report 2014
81
NOTES TO THE FINANCIAL STATEMENTS
31 December 2014 (continued)
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
4.10 Financial instruments (continued)
(b) Financial liabilities (continued)
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 expired. 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 reliable
estimate can be made of the amount of the obligation.
(c) Equity
An equity instrument is any contract that evidences a residual interest in the assets of the Group
and of 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.
Interim dividends to shareholders are recognised in equity in the period in which they are
declared. Final dividends are recognised upon the approval of shareholders in a general
meeting.
The Group measures a liability to distribute non-cash assets as a dividend to the owners of the
Company at the fair value of the assets to be distributed. The carrying amount of the dividend is
remeasured at the end of each reporting period and at the settlement date, with any changes
recognised directly in equity as adjustments to the amount of the distribution. On settlement of
the transaction, the Group recognises the difference, if any, between the carrying amount of
the assets distributed and the carrying amount of the liability in profit or loss.
When the Group repurchases its own shares, the shares repurchased would be accounted for
using the treasury stock method.
