Cookie information

38. Fair value of financial instruments

Fair value is the amount at which a financial instrument can be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The best evidence of the fair value is an active quoted market price of a financial instrument.

The estimated fair values of financial instruments have been determined by the Group using available market information, where it exists, and appropriate valuation methodologies. However, judgement is necessarily required to interpret market data to determine the estimated fair value. Management uses all available market information in estimating the fair value of financial instruments.

Financial instruments carried at fair value.

This category includes only derivative financial instruments disclosed in Note 24.

Financial assets carried at amortised cost.

The fair value of instruments with a floating interest rate is normally equal to their carrying value. The estimated fair value of fixed interest rate instruments is based on estimated future cash flows expected to be received discounted at current interest rates effective on debt capital markets for new instruments with similar credit risk and remaining maturity. Discount rates used depend on the credit risk of the counterparty. Carrying amounts of financial receivables, lease security deposits and loans issued approximate their fair values, which belong to Level 2 in the fair value hierarchy. Cash and cash equivalents are carried at amortised cost which is approximately equal to their fair value.

Liabilities carried at amortised cost.

The fair value of financial instruments is measured based on the current market quotes, if any. The estimated fair value of unquoted fixed interest rate instruments with stated maturity was estimated based on expected cash flows discounted at current interest rates for new instruments with similar credit risk and remaining maturity. As at 31 December 2013 and 31 December 2012, the fair values of financial payables (Note 25), finance lease liabilities (Note 28), loans and bonds (Note 30) were not materially different from their carrying amounts. The fair values of financial payables, finance lease liabilities and loans are categorised as Levels 2, while bonds are categorised as Level 1 in the fair value hierarchy.