Annual Report 2011 - QuamIR

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Notes to the Consolidated Financial StatementsFor the year ended 31 March 20113. Significant Accounting Policies (continued)Financial instruments (continued)Financial liabilities and equity instruments (continued)Financial liabilities at FVTPL (continued)A financial liability other than a financial liability held for trading may be designated as at FVTPL uponinitial recognition if:• such designation eliminates or significantly reduces a measurement or recognition inconsistencythat would otherwise arise; or• the financial liability forms part of a group of financial assets or financial liabilities or both, whichis managed and its performance is evaluated on a fair value basis, in accordance with the Group’sdocumented risk management or investment strategy, and information about the grouping isprovided internally on that basis; or• it forms part of a contract containing one or more embedded derivatives, and HKAS 39 FinancialInstruments: Recognition and Measurement permits the entire combined contract (asset orliability) to be designated as at FVTPL.Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurementrecognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any interestpaid on the financial liability and is included in the consolidated statement of comprehensive income.Other financial liabilitiesOther financial liabilities (including trade and other payables, amount due to a non-controlling interest ofa subsidiary, amounts due to related companies, convertible bonds and promissory note) are subsequentlymeasured at amortized cost using the effective interest method.Effective interest methodThe effective interest method is a method of calculating the amortized cost of a financial liability and ofallocating interest expense over the relevant period. The effective interest rate is the rate that exactlydiscounts estimated future cash payments (including all fees and points paid or received that form anintegral part of the effective interest rate, transaction costs and other premiums or discounts) throughthe expected life of the financial liability, or, where appropriate, a shorter period to the net carryingamount on initial recognition.Interest expense is recognized on an effective interest basis other than financial liabilities classified asat FVTPL.Sino Prosper State Gold Resources Holdings Limited68
Notes to the Consolidated Financial StatementsFor the year ended 31 March 20113. Significant Accounting Policies (continued)Financial instruments (continued)Financial liabilities and equity instruments (continued)Convertible bondsConvertible bonds issued by the Company are classified separately as financial liabilities and equityin accordance with the substance of the contractual arrangements and the definitions of a financialliability and an equity instrument. Conversion option that will be settled by the exchange of a fixedamount of cash or another financial asset for a fixed number of the Company’s own equity instrumentsis an equity instrument.At the date of issue, the fair value of the liability component is estimated using the prevailing marketinterest rate for similar non-convertible instruments. This amount is recorded as a liability on anamortized cost basis using the effective interest method until extinguished upon conversion or at theinstrument’s maturity date.The conversion option classified as equity is determined by deducting the amount of the liabilitycomponent from the fair value of the compound instrument as a whole. This is recognized and includedin equity, net of income tax effects, and is not subsequently remeasured. In addition, the conversionoption classified as equity will remain in equity until the conversion option is exercised, in which case,the balance recognized in equity will be transferred to share premium. Where the conversion optionremains unexercised at the maturity date of the convertible bonds, the balance recognized in equity willbe transferred to accumulated losses. No gain or loss is recognized in profit or loss upon conversion orexpiration of the conversion option.Transaction costs that relate to the issue of the convertible bonds are allocated to the liability andequity components in proportion to the allocation of the gross proceeds. Transaction costs relatingto the equity component are recognized directly in equity. Transaction costs relating to the liabilitycomponent are included in the carrying amount of the liability component and are amortized over thelives of the convertible bonds using the effective interest method.DerecognitionThe Group derecognizes a financial asset only when the contractual rights to the cash flows from theasset expire, or when it transfers the financial asset and substantially all the risks and rewards ofownership of the asset to another entity. If the Group neither transfers nor retains substantially all therisks and rewards of ownership and continues to control the transferred asset, the Group recognizesits retained interest in the asset and an associated liability for amounts it may have to pay. If theGroup retains substantially all the risks and rewards of ownership of a transferred financial asset, theGroup continues to recognize the financial asset and also recognizes a collateralized borrowing for theproceeds received.On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amountand the sum of the consideration received and receivable and the cumulative gain or loss that had beenrecognized in other comprehensive income and accumulated in equity is recognized in profit or loss.Annual Report 201169
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Sino Prosper State Gold Resources H
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Year in Review2010-2011April 2010HK
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Chairman’s MessageOver the course
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Chairman’s MessageFor its part, A
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Management Discussion & AnalysisAft
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Management Discussion & AnalysisInv
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Management Discussion & AnalysisTar
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Page 21 and 22: Directors’ and Management Profile
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Page 25 and 26: Corporate Governance ReportDIRECTOR
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Page 31 and 32: Directors’ ReportMr. Cai Wei Lun
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Page 39 and 40: Consolidated Statement of Financial
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Notes to the Consolidated Financial
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Notes to the Consolidated Financial
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Financial SummaryFor the year ended
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Annual Report 2011 - QuamIR

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