For the financial year ended 31 December 2015
69
ANNUAL REPORT 2015
2. SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
(o) Hedging activities
The Group documents at the inception of the transaction the relationship between the hedging instruments and
hedged items, as well as its risk management objective and strategies for undertaking various hedge transactions.
The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the
derivatives designated as hedging instruments are highly effective in offsetting changes in fair value or cash flows
of the hedged items. A non-derivative financial asset or non-derivative financial liability may be designated as
a hedging instrument for a hedge of a foreign currency risk.
The fair value changes on the hedged item resulting from currency risk are recognised in profit or loss. The fair
value changes on the portion of the hedging instrument designated as fair value hedges are recognised in profit
or loss within the same line item as the fair value changes from the hedged item.
(p) Fair value estimation
The fair values of current financial assets and liabilities, carried at amortised cost, are assumed to approximate
their carrying amounts.
The fair values of financial instruments traded in active markets (such as exchange-traded and over-the-counter
securities and derivatives) are based on quoted market prices obtained from stock exchange at the end of the
reporting period. The quoted market prices used for financial assets held by the Group are the current bid prices;
the appropriate quoted market prices for financial liabilities are the current asking prices.
The fair values of financial instruments that are not traded in an active market are determined by using valuation
techniques. The Group uses a variety of methods such as estimated discounted cash flow analyses.
(q) Currency translation
(1) Functional and presentation currency
Items included in the financial statements of each entity in the Group are measured using the currency of the
primary economic environment in which the entity operates (“the functional currency”). The consolidated
financial statements of the Group are presented in Singapore Dollar, which is the Company’s functional
currency.
(2) Transactions and balances
Transactions in a currency other than the functional currency (“foreign currency”) are translated into the
functional currency using the exchange rates prevailing at the dates of transactions. Currency translation
differences resulting from the settlement of such transactions and from the translation of monetary assets
and liabilities denominated in foreign currencies at the closing exchange rates at the end of the reporting
period are recognised in profit or loss, except for currency translation differences on the net investment
in foreign operations, borrowings in foreign currencies and other currency instruments designated and
qualifying as net investment hedges for foreign operations, which are included in other comprehensive
income and accumulated in the foreign currency translation reserve within equity.
NOT E S TO T H E F I NAN C I A L S TAT EME N T S
(CONTINUED)
