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4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(w) Financial instruments (continued)(iii) Financial instruments not recognised on the Balance SheetThe Group is a party to financial instruments that comprise foreign currency forward contracts and interestrate swap agreements. These instruments are not recognised in the financial statements on inception.Foreign currency forward contracts and cross currency swapsThe Group enters into foreign currency forward contracts to protect the Group from movements in exchangerates by establishing the rate at which a foreign currency asset or liability will be settled.Exchange gains and losses on contracts are recognised when settled at which time they are included in themeasurement of the transaction hedged.Interest rate swap contractsAny differential to be paid or received on an interest rate swap contract is recognised as a component ofinterest income or expense over the period of the contract. Gains and losses on early termination of interestrate swaps or on repayment of the borrowing are taken to the Income Statement.(iv) Fair value estimation for disclosure purposesThe fair value of publicly traded financial instruments is based on quoted market prices at the balance sheetdate. The fair value of interest rate swaps is calculated as the present value of the estimated future cashflows. The fair value of forward foreign exchange contracts is determined using forward exchange marketrates at the balance sheet date.In assessing the fair value of non-traded financial instruments, the Group uses a variety of methods and makesassumptions that are based on market conditions existing at each balance sheet date. Quoted market pricesare used if available or other techniques, such as estimated discounted value of future cash flows, are usedto determine fair value. In particular, the fair value of financial liabilities is estimated by discounting the futurecontractual cash flows at the current market interest rate available to the Group for similar financialinstruments.The carrying values for financial assets and liabilities with a maturity of less than one year are assumed toapproximate their fair values.(x)Segment reportingSegment reporting is presented for enhanced assessment of the Group’s risks and returns. A business segment isa group of assets and operations engaged in providing products or services that are subject to risks and returnsthat are different from those of other business segments. A geographical segment is engaged in providing productsor services within a particular economic environment that is subject to risks and returns that are different fromother geographical segments.Axiata Group Berhad • 192