2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.22 Borrowings and borrowing costs
(a) Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred.
Borrowings are subsequently carried at amortised cost; any difference between initial recognised amount and the
redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest
method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent
that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the
draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be
drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the
facility to which it relates.
Where the terms of a financial liability are renegotiated and the Company issues equity instruments to a creditor
to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in profit or loss, which
is measured as the difference between the carrying amount of the financial liability and the fair value of the
equity instruments issued.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of
the liability for at least 12 months after the end of the reporting period.
(b) Borrowing costs
General and specific borrowing costs directly attributable to the acquisition, construction or production of
qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their
intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready
for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist
of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.
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NOTES TO THE
FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)
