BIMB Integrated Annual Report 2017

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.5 Financial instruments (continued) (b) Financial instrument categories and subsequent measurement (continued) Financial assets (continued) (ii) Held-to-maturity investments Held-to-maturity investments category comprises Islamic debt instruments that are quoted in an active market and the Group or the Company has the positive intention and ability to hold them to maturity. Financial assets categorised as held-to-maturity investments are subsequently measured at amortised cost using the effective profit method. Any sale or reclassification of more than insignificant amount of financial assets held-to-maturity not close to their maturity would result in the reclassification of all financial assets held-to-maturity to financial assets available-for- sale and the Group would be prevented from classifying any financial assets as financial assets held-to-maturity for the current and following two financial years. (iii) Financing and receivables Financing and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in active market and the Group does not intend to sell immediately or in the near term. The Group’s financing and receivables consist of sale-based contracts (namely Bai’ Bithaman Ajil, Bai Al-Inah, Murabahah, Bai Al-Dayn and At-Tawarruq), lease-based contracts (namely Ijarah Muntahiah Bit-Tamleek and Ijarah Thumma Al- Bai), construction-based contract (Istisna’) and Ar-Rahnu contract. These financing contracts are recorded in the Group’s financial statements as financing and receivables based on concept of ‘substance over form’ and in accordance with MFRS 139. These contracts are subsequently measured at amortised cost using effective profit rate method. These contracts are stated net of unearned income and any impairment loss. (iv) Available-for-sale financial assets Available-for-sale category comprises investment in equity and Islamic debt securities instruments that are not held-for-trading. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost. Other financial assets categorised as available-for-sale are subsequently measured at their fair values with the gain or loss recognised in other comprehensive income, except for impairment losses, foreign exchange gains and losses arising from monetary items and gains and losses of hedged items attributable to hedge risks of fair value hedges which are recognised in profit or loss. On derecognition, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit or loss. Profit calculated for an Islamic debt instrument using the effective profit method is recognised in profit or loss. (v) Takaful receivables Takaful receivables are recognisedwhen due andmeasured on initial recognition at the fair value of the consideration received or receivable. Subsequent to initial recognition, takaful receivables are measured at amortised cost, using the effective profit method. All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment (see Note 2.11). NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 178 BIMB HOLDINGS BERHAD Integrated Annual Report 2017