72
NATURAL COOL HOLDINGS LIMITED
NOTES TO
THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
20 Determination of fair values
A number of Group’s accounting policies and disclosures require the determination of fair value, for both
financial and non-financial assets and liabilities. Fair values have been determined for measurement and/
or disclosure purposes based on the following methods. When applicable, further information about the
assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
Non-derivative financial liabilities
The fair values of non-derivative financial liabilities which are determined for disclosure purposes, are
calculated based on the present value of future principal and interest cash flows, discounted at the market
rate of interest at the reporting date. For finance leases, the market rate of interest is determined by
reference to similar lease agreements.
Other non-derivative financial assets and liabilities
The carrying amounts of other non-derivative financial assets and liabilities with a maturity of less than one
year (including trade and other receivables, cash and cash equivalents, and trade and other payables) are
assumed to approximate their fair values because of the short period to maturity.
Other investments
The following table shows the valuation techniques used in measuring the Level 3 fair values as well as the
significant unobservable inputs used for other investments:
Type
Valuation technique
Significant
unobservable
inputs
Inter-relationship
between significant
unobservable
input and fair value
measurement
Other
investments
The fair values of available-for-sale financial
assets and financial assets designated at
fair value through profit or loss which are
not traded in active markets are determined
using applicable valuation techniques (e.g.
income approach).
The Group may use a variety of methods
and make assumptions that are based
on existing market conditions at each
reporting date. Valuation techniques,
such as estimated discounted cash flows,
are used to determine fair value of these
financial assets. Where discounted cash
flows techniques are used, management
will estimate the future cash flows and use
relevant market rate as the discount rate at
the reporting date.
Risk-adjusted
discount rate of
1.34%.
The fair value of
the instruments will
increase/(decrease)
if the discount rates
were lower/(higher).
Sensitivity analysis
Management considers that changing the significant unobservable inputs used to other reasonably possible
alternative assumptions would not result in a significant change in the estimated fair value.
