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Notes To The Consolidated Financial Statements
(Expressed in Renminbi)
Annual Report 2011 /
1
2
Significant accounting policies
(continued)
(o) Trade and other receivables
Trade and other receivables are initially recognised at fair value and thereafter stated at amortised
cost using the effective interest method, less allowance for impairment of doubtful debts (see note
2(l)), except where the receivables are interest-free loans made to related parties without any fixed
repayment terms or the effect of discounting would be immaterial. In such cases, the receivables are
stated at cost less allowance for impairment of doubtful debts (see note 2(l)).
(p) Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs.
Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any
difference between the amount initially recognised and redemption value being recognised in the
consolidated income statement over the period of the borrowings, together with any interest and fees
payable, using the effective interest method.
(q) Trade and other payables
Trade and other payables are initially recognised at fair value and thereafter stated at amortised cost
unless the effect of discounting would be immaterial, in which case they are stated at cost.
(r) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other
financial institutions, and short-term, highly liquid investments that are readily convertible into known
amounts of cash and which are subject to an insignificant risk of changes in value, having been within
three months of maturity at acquisition.
(s) Derivative financial instruments
Derivative financial instruments are initially recognised at fair value. At each balance sheet date the fair
value is remeasured. The gain or loss on remeasurement to fair value is charged immediately to the
consolidated income statement, except where the derivative qualify for cash flow hedge accounting or
hedge the net investment in a foreign operation.
(t) Employee benefits
(i)
Short-term employee benefits and contributions to defined contribution retirement plans
Salaries, annual bonuses, paid annual leave, contributions to defined contribution retirement
plans and the cost of non-monetary benefits are accrued in the year in which the associated
services are rendered by employees. Where payment or settlement is deferred and the effect
would be material, these amounts are stated at their present values.
(ii)
Share appreciation rights schemes
Compensation expense under the Group’s share appreciation rights schemes are measured as
the amount by which the quoted market price of the Company’s H shares exceeds the exercise
price. Compensation expense in respect of the share appreciation rights granted is accrued as
a charge to the consolidated income statement over the applicable vesting period based on the
fair value of the stock appreciation rights. The liability of the accrued compensation expense is
remeasured to fair value at each balance sheet date with the effect of changes in the fair value
of the liability is charged or credited to the consolidated income statement. Further details of
the Group’s share appreciation rights scheme are set out in note 40.