NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2011
Amounts paid and received in excess of the amounts borrowed and lent on the repos and reverse repos are amortised as
interest expense and interest income respectively using the effective interest method.
2.10 Goodwill on consolidation
Goodwill arising from business combinations on or after 1 January 2010 represents the excess of the consideration
transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous
equity interest in the acquiree over the fair value of the net identifiable assets acquired. Goodwill in business combinations
prior to 1 January 2010 represents the excess of acquisition cost over the fair values of the identifiable assets acquired, liabilities
and contingent liabilities assumed at the date of exchange. Goodwill is stated at cost less impairment losses and it is tested
at least annually for impairment.
Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired i.e. a discount on
acquisition is recognised directly in the income statement in the period of acquisition.
At the acquisition date, any goodwill acquired is allocated to each of the cash-generating units CGU expected to benefit
from the combination’s synergies for the purpose of impairment testing.
2.11 Properties and other fixed assets
Properties including investment properties and other fixed assets are stated at cost less accumulated depreciation and
allowances for impairment. The cost of an item of properties and other fixed assets includes its purchase price and any cost
that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the
manner intended by management.
The basis of depreciation is as follows:
Properties Leasehold land, where the balance of the leasehold period is
100 years or less, is depreciated on a straight-line basis over the remaining period of the lease. Leasehold land where the
unexpired lease period is more than 100 years is not depreciated.
Buildings are depreciated on a straight-line basis over their useful lives estimated at 50 years or over the remaining lease
period, whichever is shorter.
Other fixed assets Depreciation is calculated using the straight-line method to
write down the cost of other fixed assets to their residual values over their estimated useful lives as follows:
IntangibleComputer software 3 – 5 years
Office equipment 5 – 8 years
Furniture and fittings 5 – 8 years
The estimated useful life and residual values of fixed assets are reviewed on each balance sheet date.
Subsequent expenditure relating to properties and other fixed assets that has already been recognised is added to the carrying
amount of the asset only when it is probable that future economic benefits associated with the item will flow to the
Group and the cost can be measured reliably. Other subsequent expenditure is recognised as hire and maintenance expense
in the income statement during the financial year in which it is incurred.
Upon disposal, the difference between the net disposal proceeds and its carrying amount is taken to the income
statement.
2.12 Impairment of non-financial assets
Goodwill An impairment loss is recognised when the carrying amount of
a CGU, including the goodwill, exceeds the recoverable amount of the CGU. Recoverable amount of a CGU is the higher of the
CGU’s fair value less cost to sell and its value-in-use.
An impairment loss on goodwill recognised in the income statement cannot be reversed in subsequent periods.
Properties and other fixed assets, and investments in subsidiaries, associates and joint ventures
Properties including investment properties and other fixed assets, and investments in subsidiaries, associates and joint
ventures are reviewed for impairment at each balance sheet date to determine if events or changes in circumstances indicate
that the carrying value may not be recoverable. If such an indication exists, the carrying value of the asset is written down
to its recoverable amount being the higher of the fair value less cost to sell and the value-in-use. The impairment loss is
charged to the income statement.
2.13 Financial liabilities
The Group classifies its financial liabilities in the following categories: a financial liabilities at fair value through profit or
loss; and b financial liabilities at amortised cost.
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Financial liabilities are classified as financial liabilities at fair value through profit or loss if they are incurred for the purpose of
repurchasing in the near term held for trading or designated by management on initial recognition designated under the fair
value option.
Derivatives are classified as held for trading unless they are designated as hedging instruments. The specific Group
accounting policy on derivatives is detailed in Note 2.15.
Financial liabilities designated under the fair value option meet at least one of the following criteria upon designation:
• iteliminatesorsigniicantlyreducesmeasurementor recognition inconsistencies that would otherwise arise from
measuring financial liabilities, or recognising gains or losses on them, using different bases; or
• theinancialliabilitycontainsanembeddedderivativethat would otherwise need to be separately recorded.
Financial liabilities are initially recognised at fair value, net of transaction costs incurred, except for financial liabilities at fair
value through profit or loss, for which transaction costs are expensed off immediately.
Financial liabilities classified as fair value through profit or loss are subsequently carried at fair value. Realised or unrealised
gains or losses on financial liabilities held for trading and financial liabilities designated under the fair value option,
except interest expense, are taken to “Net trading income” and “Net income from financial instruments designated at fair
value” respectively in the income statement in the period they arise. All other financial liabilities are subsequently carried at
amortised cost using the effective interest method.
The fair value of financial liabilities is estimated by discounting the future contractual cash flows at the current market interest
rate that is available to the Group for similar financial instruments. Where applicable, a valuation reserve or pricing
adjustment is applied to arrive at the fair value. A financial liability is removed or derecognised from the balance
sheet when the obligation specified in the contract is discharged, cancelled or expired.
2.14 Provisions and other liabilities
