ANNUAL REPORT 2014
71
NOTES TO THE FINANCIAL STATEMENTS
(CONTINUED)
For the financial year ended 31 December 2014
2.
SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
(x)
Borrowings
Borrowings are presented as current liabilities unless the Group has an unconditional right to defer settlement
for at least 12 months after the end of the reporting period, in which case, they are presented as non-current
liabilities.
Borrowings are initially recognised at fair value (net of transaction costs) and subsequently carried at amortised
cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised
in profit or loss over the period of the borrowings using the effective interest method.
Borrowing costs are recognised in profit or loss using the effective interest method.
(y)
Critical accounting estimates and judgements
Estimates, assumptions and judgements are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates
will, by definition, seldom equal to the related actual results. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the
next financial year are discussed below.
(1)
Investment in Hua Han Bio-Pharmaceutical Holdings Limited (“HHBP”)
Management has assessed the level of influence that the Group has on HHBP (Note 28) and determined
that it has significant influence even though its shareholding is below 20 per cent because of its
representations on the board of HHBP, to participate and influence all major decisions relating to the
relevant activities of HHBP. Consequently, this investment has been classified as an associate.
(2)
Impairment of property, plant and equipment
The Group tests annually whether property, plant and equipment have suffered any impairment, in
accordance with the accounting policy stated in Note 2(h)(2). The recoverable amounts of these assets
and where applicable, cash-generating units, have been determined based on value-in-use calculations.
These calculations require the use of estimates. Based on the calculations, the estimated recoverable
amount is higher than the carrying amount of property, plant and equipment (Note 9), hence no
impairment is considered necessary.
Based on the sensitivity analysis performed, any reasonable change in the key assumptions would not
result in any impairment adjustments.
