Investor Presentaiton
HKAS 1.51(a)
HKAS 1.49
HK Listco Ltd
Financial statements for the year ended 31 December 2023
HKFRS 7.21
(w)
Convertible notes
(i)
Convertible notes that contain an equity component
(ii)
Compound financial instruments issued by the group comprise convertible notes denominated in
HKD that can be converted to ordinary shares at the option of the holder, when the number of
shares to be issued is fixed and does not vary with changes in fair value.
The liability component of compound financial instruments is initially recognised at the fair value of a
similar liability that does not have an equity conversion option. The equity component is initially
recognised at the difference between the fair value of the compound financial instrument as a whole
and the fair value of the liability component. Any directly attributable transaction costs are allocated
to the liability and equity components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component is measured at amortised cost using the
effective interest method. Interest is recognised in profit or loss. The equity component is not
remeasured and is recognised in the capital reserve until the notes are converted.
If the notes are converted, the capital reserve, together with the carrying amount of the liability
component at the time of conversion, is transferred to share capital and share premium as
consideration for the shares issued.
Other convertible notes
For convertible notes which do not contain an equity component, at initial recognition the derivative
component is measured at fair value and presented as part of derivative financial instruments (see
note 1(h)). Any excess of proceeds over the amount initially recognised as the derivative component
is recognised as the host liability component. Any directly attributable transaction costs are
allocated to the host liability and derivative components in proportion to their initial carrying
amounts. The portion of the transaction costs relating to the host liability component is recognised
initially as part of the liability. The portion relating to the derivative component is recognised
immediately in profit or loss.
The derivative component is subsequently remeasured in accordance with note 1(h). The host
liability component is subsequently carried at amortised cost using effective interest method.
Interest related to the host liability component is recognised in profit or loss.
If the notes are converted, the shares issued are measured at fair value and any difference between
the fair value of shares issued and the carrying amounts of the derivative and liability components
are recognised in profit or loss. If the notes are redeemed, any difference between the amount paid
and the carrying amounts of both components is recognised in profit or loss.
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