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Notes to the Financial Statements
31 December 2015
2 BASIS OF PREPARATION (CONTINUED)
(b) Standards and amendments to published standards that are applicable to the Group and the Company but not yet effective
A number of new standards and amendments to published standards are effective for financial year beginning after 1 January 2015. None
of these is expected to have a significant effect on the consolidated and separate financial statements of the Group and the Company
respectively, except for standards set out below:
• MFRS 9 “Financial Instruments” (effective from 1 January 2018) will replace MFRS 139 “Financial Instruments: Recognition and
Measurement”.
MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary measurement categories
for financial assets: amortised cost, fair value through profit or loss and fair value through other comprehensive income. The basis of
classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. Investments
in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present
changes in fair value in other comprehensive income (provided the instrument is not held for trading). A debt instrument is measured
at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest.
For financial liabilities, the standard retains most of the MFRS 139 requirements. These include amortised cost accounting for most
financial liabilities, with bifurcation of embedded derivatives. The main change is that, in cases where the fair value option is taken for
financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather
than the statement of profit or loss, unless this creates an accounting mismatch.
MFRS 9 introduces an expected credit losses model on impairment for all financial assets that replaces the incurred loss impairment
model used in MFRS 139. The expected credit losses model is forward-looking and eliminates the need for a trigger event to have
occurred before credit losses are recognised. The Group and the Company are in the process of assessing the impact of MFRS 9.
• MFRS 15 “Revenue from Contracts with Customers” (effective from 1 January 2018) replaces MFRS 118 “Revenue” and MFRS 111
“Construction Contracts” and related interpretations. The standard deals with revenue recognition and establishes principles for
reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash
flows arising from an entity’s contracts with customers.
Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain
the benefits from the good or service. The core principle in MFRS 15 is that an entity recognises revenue to depict the transfer of
promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. The Group and the Company are in the process of assessing the impact of MFRS 15.
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies have been applied consistently in dealing with items that are considered material in relation to the financial
statements.
(a) Basis of consolidation
(i)
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control ceases.
