Page 87 - SAR141018_Forterra AR 2013

FORTERRA
ANNUAL REPORT 2013
NOTES TO THE
FINANCIAL STATEMENTS
85
3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(e) Financial instruments (Continued)
(ii) Non-derivative financial liabilities
The Group initially recognises debt securities issued on the date that they are
originated. All other financial liabilities (including liabilities designated at fair value
through profit or loss) are recognised initially on the trade date, which is the date
that the Group becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations are
discharged, cancelled or when they expire.
Financial assets and liabilities are offset and the net amount presented in the
Statement of Financial Position when, and only when, the Group has a legal right to
offset the amounts and intends either to settle on a net basis or to realise the asset
and settle the liability simultaneously.
Such financial liabilities are recognised initially at fair value plus any directly
attributable transaction costs. Subsequent to initial recognition, these financial
liabilities are measured at amortised cost using the effective interest method.
(iii) Compound financial instruments
Compound financial instruments issued by the Group comprise convertible bonds
denominated in Singapore Dollars and convertible notes denominated in Chinese
RMB, which are different from the functional currency of the Trust. These convertible
debt instruments can be converted to units of the Trust at the option of the holder,
where the number of units to be issued does not vary with changes in their fair value.
Convertible debts denominated in the functional currency of the Trust
The liability component of a compound financial instrument is recognised initially
at the fair value of a similar liability that does not have an equity conversion option.
The equity component is recognised initially at the difference between the fair value
of the compound financial instrument as a whole and the fair value of the liability
component. Any directly attributable transaction costs are allocated to the liability
and equity components in proportion to their initial carrying amounts.