121
ANNUAL REPORT 2015
Notes to the Financial Statements (cont’d)
for the financial year ended 30 June 2015
34. Fair value of financial instruments (cont’d)
(b) Determination of fair value
The following are classes of financial instruments that are not carried at fair value and whose carrying amounts
are reasonable approximation of fair value:
Note
Trade and other receivables
22
Derivatives
25
Cash and bank balances
26
Loans and borrowings (current and non-current, except
non-current obligations under finance leases)
27
Trade and other payables
28
(i)
Cash and bank balances, other receivables and other payables
The carrying amounts of these balances approximate their fair values due to the short term nature.
(ii)
Trade receivables and trade payables
The carrying amounts of trade receivables and trade payables approximate their fair values because
they are subject to normal trade credit terms.
(iii) Amounts due from/to subsidiaries
The carrying values of the amounts due from/to subsidiaries approximate their fair values due to the
short term nature or that they are floating rate instruments that are re-priced to market interest rates on
or near the reporting date.
(iv) Loans and borrowings
The carrying values of bank borrowings and term loans approximate their fair values as they bear interest
rates which approximate the current incremental borrowing rates for similar types of lending and borrowing
arrangements.
(v) Derivatives
The fair values of cross currency swaps and forward currency contracts are the amounts that would be
payable or receivable on termination of the outstanding position arising and are determined by reference
to the difference between the contracted rate and forward exchange rates at the reporting date for
contracts with similar maturity profiles.
(vi) Financial guarantees
Fair value is determined based on the probability weighted discounted cash flow method. The probability
has been estimated and assigned for the following key assumptions:
-
The likelihood of the guaranteed party defaulting within the guaranteed period;
-
The exposure on the portion that is not expected to be recovered due to the guaranteed party’s
default;
-
The estimated loss exposure if the party guaranteed were to default.
