9 Financial assets at fair value through other comprehensive income (“FVOCI”) and available-for-sale financial assets (“AFS”)

US$'000Fair value
Listed equity securities (a)Level 1-569

(a) Listed equity securities represent the Group’s investment in Greka Drilling Limited, a company listed on the London AIM market. During the year, the Group sold its shares in Greka Drilling as part of its long-standing initiative to dispose of non-core activities. The shares were sold at US$294,000 and the cumulative loss of US$2,200,000 was reclassified to retained profits.

The financial assets were reclassified from AFS to FVOCI following the adoption of HKFRS 9 on 1 January 2018. Please refer to Note 2(a)(iii) for the change in accounting policy.

The financial assets have been analysed by valuation method. Please see below for the definition of different levels of fair value.

Fair value levels

  • Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
  • Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
  • Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

Accounting policy

FVOCI are financial assets held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and whose contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. FVOCI are not designated as financial assets at fair value through profit or loss.

Assets in this category are initially recognised at fair value plus transaction costs that are directly attributable to the acquisition of the financial assets and are subsequently measured at fair value. Changes in the fair value are recognised in other comprehensive income.

Dividends on FVOCI instruments continue to be recognised in the income statement as other income when the Group’s right to receive payments is established. Interest on FVOCI securities calculated using the effective interest method is recognised in the income statement as part of finance income.

On derecognition, the accumulated gains and losses are reclassified to retained profits. Impairment losses (and reversal of impairment losses) are not reported separately from other changes in fair value.