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122 SIMPLY SMARTERNOTES TO THE FINANCIAL STATEMENTS31 December 2011(Currency - Singapore dollars unless otherwise stated)3. Summary of significant accounting policies (continued)(c)Financial instruments s (continued)(i)Non-derivative financial assets (continued)Available-for-sale financial assets (continued)The fair value of available-for-sale financial assets that are actively traded in organised financial markets is determined by referenceto quoted market prices at the close of business on the balance sheet date. For those financial assets where there is no activemarket, fair value is determined using valuation techniques. Such techniques include using recent arm’s length market transactions;reference to the current market value of another instrument, which is substantially the same; discounted cash flow analysis andoption pricing models.For those financial assets where there is no active market and where fair value cannot be reliably measured, they are measured at cost.Available-for-sale financial assets comprise equity securities and bonds.(ii)Non-derivative financial liabilitiesFinancial liabilities are recognised on the balance sheet when, and only when, the Group becomes a party to the contractual provisionsof the financial instrument. The Group derecognises a financial liability when its contractual obligations are discharged, cancelled orexpired.Financial assets and liabilities are offset and the net amount presented in the balance sheet when, and only when, the Group has alegal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.Non-derivative financial liabilities are recognised initially at fair value plus directly attributable transaction costs. Subsequent to initialrecognition, these financial liabilities are measured at amortised cost using the effective interest method.The Group’s financial liabilities comprise bank overdrafts, trade and other payables (including lease obligations and amounts due torelated parties) and borrowings.Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash and cash equivalents are included as acomponent of cash and cash equivalents for the purpose of the statement of cash flows.(iii)Derivative financial instruments and hedge accountingThe Group uses derivative financial instruments such as forward currency contracts, interest rate swaps and cross currency swapsto hedge its risks associated with foreign currency and interest rate fluctuations. From time to time, the Group also uses monetaryassets and liabilities and embedded derivatives as hedging instruments to hedge its risks associated with foreign currency fluctuations.Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks ofthe host contract and the embedded derivatives are not closely related, a separate instrument with the same terms as the embeddedderivatives would meet the definition of a derivative, and the combined instrument is not measured at fair value through profit or loss.