Annual Report 2009 - Greentown China Holdings Limited

Notes to the Consolidated Financial Statements
For The Year Ended 31 December 2009
6. FINANCIAL INSTRUMENTS (Continued)
(b)
Financial risk management objectives and policies (Continued)
Liquidity risk (Continued)
Liquidity and interest risk tables (Continued)
The amounts included above for financial guarantee contracts are the maximum amounts the Group
could be required to settle under the arrangement for the full guaranteed amount if that amount is
claimed by the counterparty to the guarantee. Based on expectations at the end of the reporting period,
the Group considers that it is more likely than not that no amount will be payable under the arrangement.
However, this estimate is subject to change depending on the probability of the counterparty claiming
under the guarantee which is a function of the likelihood that the financial receivables held by the
counterparty which are guaranteed suffer credit losses.
The amounts included above for variable interest rate for non-derivative financial liabilities is subject to
change if changes in variable interest rate differ from those interest rate estimates determined at the end
of the reporting period.
(c)
Fair value
The fair value of financial assets and financial liabilities (including derivative instruments) are determined
in accordance with generally accepted pricing models based on discounted cash flow analysis or using
prices or rates from observable current market transactions. For an option-based derivative, the fair value
is estimated using option pricing model (for example, the binomial model).
Except as detailed in the following table, the directors consider that the carrying amounts of financial
assets and financial liabilities recorded at amortised cost in the consolidated financial statements
approximate their fair values:
2009 2008
Carring
Carrying
amount of
amount of
liability
liability
component Fair value component Fair value
RMB’000 RMB’000 RMB’000 RMB’000
Financial liabilities
2006 Convertible Bonds – – 73,423 64,009 1
2007 Convertible Bonds 2,188,166 2,254,144 2 2,090,100 900,900 2
Senior notes 261,514 254,338 2 2,701,186 1,011,521 2
1 Based on discounted cash flow analysis using market interest rate
2 Based on quoted price
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Greentown China Holdings Limited Annual Report 2009