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GROUP ACCOUNTING
POLICIES
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PPS
INTEGRATED REPORT 2018
102
3.2
Financial assets
The Group has the following financial asset categories: financial assets at fair value through profit or
loss, as well as financial assets at amortised cost.
All financial assets are initially measured at fair value including, for financial assets not at fair value
through profit or loss, any directly attributable transaction costs. All financial asset purchases and sales
are initially recognised using trade date accounting.
Financial instruments at fair value through profit or loss
A financial asset is placed into this category if so designated by management upon initial recognition.
Financial assets designated at fair value through profit or loss, consist of local and foreign equities,
money market instruments, government bonds, corporate bonds and unit trusts. Subsequent to initial
recognition, these financial assets are accounted for at fair value. Fair value gains and losses arising
from changes in fair value are included in the Statement of Profit or Loss and other Comprehensive
Income as net fair value gains on financial assets in the period in which they arise.
Equity fair values are based on regulated exchange quoted bid prices at the close of business on the
last trading day on or before the reporting date. Bond fair values are based on regulated exchange
quoted closing prices at the close of business on the last trading day, on or before the reporting date.
Unit trust fair values are based on the net asset value (price) on the reporting date.
Financial assets at amortised cost
Insurance and other receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market.
Insurance and other receivables are initially measured at fair value and subsequently at amortised
cost using the effective interest rate method less impairment adjustments (accounting policy note 12).
3.3
Financial liabilities
A financial liability is any liability that is a contractual obligation to deliver cash or another financial
asset to another entity.
Financial liabilities include other payables, borrowings categorised as financial liabilities at amortised
cost, investment contract liabilities (accounting policy note 4.2.3) and third-party financial liabilities
arising on consolidation of unit trusts (accounting policy note 2), designated on initial recognition as
at fair value through profit and loss.
Other payables are initially measured at fair value less transaction costs that are directly attributable
to the raising of the funds, and are subsequently stated at amortised cost using the effective interest
rate method. Any difference between the proceeds, net of transaction costs and the redemption value
is recognised in the Statement of Profit or Loss and other Comprehensive Income over the period
of borrowing.
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any difference between the proceeds (net of transaction
costs) and the redemption value is recognised in the Statement of Profit or Loss and other Comprehensive
Income over the period of the borrowings using the effective interest method.
Investment contract liabilities are initially measured at fair value less transaction
costs, and are subsequently measured at fair value.
Third-party financial liabilities arising on consolidation of unit trusts are measured at fair value, which
is the unquoted unit values as derived by the fund administrator, with reference to the rules of each
particular fund. Fair value gains or losses are recognised in the Statement of Profit or Loss and other
Comprehensive Income.
3. FINANCIAL INSTRUMENTS
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