Classification
All financial assets and liabilities are initially measured at transaction price (including transaction costs), except for
those financial assets classified as at fair value through profit or loss, which are initially measured at fair value
(which is normally the transaction price excluding transaction costs), unless the arrangement constitutes a financing
transaction. If an arrangement constitutes a finance transaction, the financial asset or financial liability is measured
at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.
Financial assets and liabilities are only offset in the balance sheet when, and only when there exists a legally
enforceable right to set off the recognised amounts and the limited liability partnership intends either to settle on a
net basis, or to realise the asset and settle the liability simultaneously.
Recognition and measurement
Debt instruments which meet the following conditions are subsequently measured at amortised cost using the
effective interest method:
(a) The contractual return to the holder is (i) a fixed amount; (ii) a positive fixed rate or a positive variable rate; or
(iii) a combination of a positive or a negative fixed rate and a positive variable rate.
(b) The contract may provide for repayments of the principal or the return to the holder (but not both) to be linked to
a single relevant observable index of general price inflation of the currency in which the debt instrument is
denominated, provided such links are not leveraged.
(c) The contract may provide for a determinable variation of the return to the holder during the life of the instrument,
provided that (i) the new rate satisfies condition (a) and the variation is not contingent on future events other than (1)
a change of a contractual variable rate; (2) to protect the holder against credit deterioration of the issuer; (3) changes
in levies applied by a central bank or arising from changes in relevant taxation or law; or (ii) the new rate is a market
rate of interest and satisfies condition (a).
(d) There is no contractual provision that could, by its terms, result in the holder losing the principal amount or any
interest attributable to the current period or prior periods.
(e) Contractual provisions that permit the issuer to prepay a debt instrument or permit the holder to put it back to the
issuer before maturity are not contingent on future events, other than to protect the holder against the credit
deterioration of the issuer or a change in control of the issuer, or to protect the holder or issuer against changes in
levies applied by a central bank or arising from changes in relevant taxation or law.
(f) Contractual provisions may permit the extension of the term of the debt instrument, provided that the return to
the holder and any other contractual provisions applicable during the extended term satisfy the conditions of
paragraphs (a) to (c).
Debt instruments that are classified as payable or receivable within one year on initial recognition and which meet
the above conditions are measured at the undiscounted amount of the cash or other consideration expected to be paid
or received, net of impairment.
With the exception of some hedging instruments, other debt instruments not meeting these conditions are measured
at fair value through profit or loss.
Commitments to make and receive loans which meet the conditions mentioned above are measured at cost (which
may be nil) less impairment.
Impairment
Financial assets are derecognised when and only when a) the contractual rights to the cash flows from the financial
asset expire or are settled, b) the limited liability partnership transfers to another party substantially all of the risks
and rewards of ownership of the financial asset, or c) the limited liability partnership, despite having retained some
significant risks and rewards of ownership, has transferred control of the asset to another party and the other party
has the practical ability to sell the asset in its entirety to an unrelated third party and is able to exercise that ability
unilaterally and without needing to impose additional restrictions on the transfer.
Financial liabilities are derecognised only when the obligation specified in the contract is discharged, cancelled or
expires.
Derivative financial instruments and hedging
Derivatives
The limited liability partnership uses derivative financial instruments to reduce exposure to foreign exchange risk
and interest rate movements. The limited liability partnership does not hold or issue derivative financial instruments
for speculative purposes.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in profit or loss
immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of
the recognition in profit or loss depends on the nature of the hedge relationship.
Hedging
The limited liability partnership designates certain derivatives as hedging instruments in respect of variable interest
rate risk of the cash flows associated with recognised debt instruments measured at amortised cost and in respect of
foreign exchange risk in firm commitments and highly probable forecast transactions.
At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and
the hedged item, along with the clear identification of the risk in the hedged item that is being hedged by the
hedging instrument. Furthermore, at the inception of the hedge and on an ongoing basis, the limited liability
partnership assesses whether the hedging instrument is highly effective in offsetting the designated hedged risk.
The effective portion of changes in the fair value of the designated hedging instrument is recognised in other
comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in profit or
loss. Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to
profit or loss in the periods in which the hedged item affects profit or loss or when the hedging relationship ends.
Hedge accounting is discontinued when the limited liability partnership revokes the hedging relationship, the
hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Any
gain or loss accumulated in equity at that time is reclassified to profit or loss when the hedged item is recognised in
profit or loss. When a forecast transaction is no longer expected to occu.
Current versus non-current classification
Investments in non-convertible preference shares and non-puttable ordinary or preference shares (where shares are
publicly traded or their fair value is reliably measurable) are measured at fair value through profit or loss. Where fair
value cannot be measured reliably, investments are measured at cost less impairment.
In the limited liability partnership balance sheet, investments in subsidiaries and associates are measured at cost less
impairment.