For the financial year ended 31 December 2015
71
ANNUAL REPORT 2015
2. SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
(t) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary
shares are deducted against the share capital account. When the Company’s ordinary shares are repurchased,
the weighted average cost of each share is written off against the share capital, with the remaining amounts
written off against the retained earnings of the Company.
(u) Dividends
Final dividends to the Company’s members are recognised when the dividends are approved by the members.
(v) Government grants
Grants from the government are recognised as a receivable at their fair value when there is reasonable assurance
that the grant will be received and the Group will comply with all the attached conditions.
Government grants receivable are recognised as income over the periods necessary to match them with the related
costs which they are intended to compensate on a systematic basis. Government grants relating to expenses are
shown separately as other income.
(w) Financial guarantees
The Company had issued corporate guarantees to banks for credit facilities of its subsidiaries. These guarantees
are financial guarantee contracts as they require the Company to reimburse the banks if the subsidiaries fail to
make principal or interest payments when due in accordance with terms of their credit facilities.
Financial guarantee contracts are initially recognised at their fair values plus transaction costs in the Company’s
statement of financial position.
Financial guarantee contracts are subsequently amortised to profit or loss over the period of the subsidiaries’
borrowings, unless it is probable that the Company will reimburse the bank for an amount higher than the
unamortised amount. In this case, the financial guarantee contracts shall be carried at the expected amount
payable to the bank in the Company’s statement of financial position.
(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.
NOT E S TO T H E F I NAN C I A L S TAT EME N T S
(CONTINUED)
