Annual Report 2012 - TodayIR.com

Lonking Holdings Limited
Annual Report 2012
Notes to the Consolidated Financial Statements
For the year ended 31 December 2012
3. SIGNIFICANT ACCOUNTING ESTIMATES (Continued)
Estimation uncertainty (Continued)
Fair value of the derivatives
The directors of the Company use their judgement in selecting appropriate valuation techniques
for derivative financial instruments, where the valuation techniques are those commonly applied
by market practitioners. Assumptions are made based on market statistics and adjusted for specific
features of the instruments. The carrying amount of the derivative instruments was RMB739,000
(31 December 2011: RMB178,429,000). Details of the derivative financial instruments and the
assumptions used are disclosed in note 27.
4. OPERATING SEGMENT INFORMATION
For management purposes, the Group is organised into business units based on their products and
services and has two reportable operating segments as follows:
(a)
the sale of construction machinery
(b)
the finance lease of construction machinery
Management monitors the results of the Group’s operating segments separately for the purpose of
making decisions about resources allocation and performance assessment. Segment performance
is evaluated based on reportable segment profit, which is a measure of adjusted profit before tax
from continuing operations. The adjusted profit before tax from continuing operations is measured
consistently with the Group’s profit before tax from continuing operations except that interest
income, finance costs, fair value gains or losses from the Group’s financial instruments as well as
head office and corporate expenses are excluded from such measurement.
Segment assets exclude part of deferred tax assets, pledged deposits, cash and cash equivalents,
and other unallocated head office and corporate assets as these assets are managed on a group
basis.
Segment liabilities exclude part of derivative financial instruments, interest-bearing bank borrowings
and long-term loan notes, convertible bonds, income tax payable, deferred tax liabilities and
other unallocated head office and corporate liabilities as these liabilities are managed on a group
basis.
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