ACCOUNTABILITY | FINANCIAL STATEMENTS 221 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 January 2024 2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (CONTINUED) 2.16 Financial instruments (continued) (iii) Financial liabilities (continued) (b) Subsequent measurement (continued) Financial guarantee contracts Financial guarantee contracts issued by the Group are contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount recognised less cumulative amortisation. The fair value of financial guarantee is determined as the present value of the difference in net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations. 2.17 Derivative financial instruments The Group uses derivative financial instruments, interest rate swaps and foreign currency forward contracts, to hedge its interest rate risks and foreign currency risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. Derivatives that do not qualify for hedge accounting are classified as fair value through profit or loss and changes in fair value are recognised in profit or loss. Derivatives that qualify for hedge accounting are designated as either: (a) Hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge); or (b) Hedges of a net investment in a foreign operation (net investment hedge).
RkJQdWJsaXNoZXIy NDgzMzc=