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Annual Report 2017
149
Notes to the
financial statements
31 march 2017
2.
Significant accounting policies (cont’d.)
2.3 Summary of significant accounting policies (cont’d.)
(t)
Financial liabilities (cont’d.)
(i)
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading or financial
liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities held for trading includes derivatives entered into by the Group that do not meet the hedge
accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair
value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include
exchange differences.
(ii)
Other financial liabilities
The Group’s and the Company’s other financial liabilities include trade payables, other payables, due to
subsidiaries and loans and borrowings.
Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and
subsequently measured at amortised cost using the effective interest method.
Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently
measured at amortised cost using the effective interest method. 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
reporting date.
A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial
liability is replaced by another from the same lender on substantially different terms, or the terms of an existing
liability are substantially modified, such an exchange or modification is treated as a derecognition of the original
liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised
in profit or loss.
(u)
Provision for liabilities
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligations and the amount of the obligation can be estimated reliably.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer
probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If
the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects,
where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to
the passage of time is recognised as a finance cost.