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HALF-YEAR REPORT 2016
Notes to the Consolidated Financial Statements
For the six months ended 30 June 2016
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32 Financial risk management and fair values
(continued)
(e) Fair values
(i) Financial instruments carried at fair value
The following table presents the carrying amounts of financial instruments measured at fair
value as at the balance sheet date across the three levels of the fair value hierarchy defined in
HKFRS 13 Fair value measurement, with the fair value of each financial instrument categorised in
its entirety based on the lowest level of input that is significant to that fair value measurement.
The levels are defined as follows:
– Level 1 (highest level): fair values measured using quoted market for similar active markets
for identical financial instruments;
– Level 2: fair values measured using quoted prices in active market for similar financial
instruments, or using valuation techniques in which all significant inputs are directly or
indirectly based on observable market data;
– Level 3 (lowest level): fair values measured using valuation techniques in which any
significant input is not based on observable market data.
The fair value of the Group’s financial assets and financial liabilities are determined as follows:
– If traded in active markets, fair values of financial assets and financial liabilities with
standard terms and conditions are determined with reference to quoted market bid prices
and ask prices, respectively;
– If not traded in active markets, fair values of financial assets and financial liabilities are
determined in accordance with generally accepted pricing models or discounted cash flow
analysis using prices from observable current market transactions for similar instruments.
If there were no available observable current market transactions prices for similar
instruments, quoted prices from counterparty is used for the valuation, and management
performs analysis on these prices. Discounted cash flow analysis using the applicable yield
curve for the duration of the instruments is used for derivatives other than options, and
option pricing models are used for option derivatives.