2. Significant accounting policies (cont’d.) 2.3 Summary of significant accounting policies (cont’d.) (j) Financial liabilities (cont’d.) Initial recognition: (cont’d.) The Group’s financial liabilities include trade and other payables, loans and borrowings, and derivative financial instruments. Subsequent measurement: The subsequent measurement of financial liabilities depends on their classification as follows: (i) Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss comprise financial liabilities that are derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) and financial liabilities that are specifically designated into this category upon initial recognition. Financial liabilities, categorised as fair value through profit or loss are subsequently measured at their fair value, with gains or losses recognised in the income statement. The Group has not designated any financial liabilities at fair value through profit or loss for the years ended 31 December 2016 and 31 December 2015. (ii) Loans and borrowings Subsequent to initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the income statement when the financial liabilities are derecognised as well as through the amortisation process. (iii) Financial guarantee contracts A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make a payment when due, in accordance with the terms of a debt instrument. Financial Statements 185
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