## 2. Basis of preparation and accounting policies (cont’d) 

## 2.3 Summary of significant accounting policies (cont’d) 

## (l) Financial instruments – initial recognition and subsequent measurement 

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. 

## Financial assets 

## Initial recognition and measurement 

Financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. 

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the Group commits to purchase or sell the asset. 

The Group’s financial assets include cash and short-term deposits, trade and other receivables, loans and other receivables, quoted and unquoted financial instruments and derivative financial instruments. 

## Subsequent measurement 

For purposes of subsequent measurement financial assets are classified in four categories: 

l Financial assets at fair value through profit or loss 

l Loans and receivables 

l Held-to-maturity investments 

l Available-for-sale financial investments 

## Financial assets at fair value through profit or loss 

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments as defined by IAS 39. 

Financial assets at fair value through profit and loss are carried in the statement of financial position at fair value with net changes in fair value presented as other operating expenses (negative net changes in fair value) or other operating income (positive net changes in fair value) in the statement of profit or loss. 

