Page 126 - ar2010

The Group has changed its accounting policy for recognition and measurement of fnancial assets upon adoption of FRS

139 “Financial instruments: Recognition and Measurement” on 1 January 2010.

Previously, investments in non-current investments are shown at cost; trade receivables are carried at invoice amount.

The Group has applied the new policy according to the transitional provision of FRS 139 by re-measuring all fnancial assets, as appropriate, and recording any adjustments to the previous carrying amounts to opening retained earnings or, if appropriate, another category of equity, of the current fnancial year. Comparative for fnancial instruments have not been adjusted and therefore the corresponding balances are not comparable. Refer to Note 44 for the impact of this change in accounting policy.

The Group classifes its fnancial assets in the following categories: loans and receivables and available-for-sale. The

classification depends on the purpose for which the financial assets were acquired. Management determines the classifcation at initial recognition.

Loans and receivables are non-derivative fnancial assets with fxed or determinable payments that are not quoted in an

active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classifed as non-current assets. The Group’s loans and receivables comprise ‘trade and other receivables’ and ‘deposits, cash and bank balances’ in the statements of fnancial position (Notes 27 and 28).

Available-for-sale fnancial assets are non-derivatives that are either designated in this category or not classifed in any of

the other categories. They are included in non-current assets unless the investment matures or management intends to dispose off it within 12 months of the end of the reporting period.

Regular purchases and sales of fnancial assets are recognised on the trade-date, the date on which the Group commits

to purchase or sell the asset.

Financial assets are initially recognised at fair value plus transaction costs for all fnancial assets.

Available-for-sale fnancial assets are subsequently carried at fair value. Loans and receivables are subsequently carried

at amortised cost using the effective interest method.

Changes in the fair value of available-for-sale fnancial assets are recognised in other comprehensive income, except for

impairment losses (see accounting policy Note 4(i)(iv)) and foreign exchange gains and losses on monetary assets. The exchange differences on monetary assets are recognised in proft or loss, whereas exchange differences on non-monetary assets are recognised in other comprehensive income as part of fair value change.

Interest and dividend income on available-for-sale fnancial assets are recognised separately in proft or loss. Interest on

available-for-sale debt securities calculated using the effective interest method is recognised in proft or loss. Dividend income on available-for-sale equity instruments are recognised in proft or loss when the Group’s right to receive payments is established.

(iv) Subsequent measurement – Impairment of fnancial assets Assets carried at amortised cost

The Group assesses at the end of the reporting period whether there is objective evidence that a fnancial asset or group

of fnancial assets is impaired. A fnancial asset or a group of fnancial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash fows of the fnancial asset or group of fnancial assets that can be reliably estimated.