Page 147 - ar2013.pdf

Notes to the Financial Statements
Year ended 31 March 2013
ANNUAL REPORT FY12/13 143
3 Significant accounting policies (continued)
(g) Financial instruments (continued)
(ii) Non-derivative financial liabilities (continued)
Financial assets and liabilities are offset and the net amount presented in the Balance Sheet when, and only when, the Group
has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability
simultaneously.
The Group classifies non-derivative financial liabilities into the following categories: financial liabilities at fair value through
profit or loss and other financial liabilities.
Financial liabilities at fair value through profit or loss
Upon initial recognition, financial liabilities are measured at fair value and attributable transaction costs are recognised in the
Statement of Total Return as incurred. Subsequent to initial recognition, the financial liabilities are measured at fair value, with
changes recognised in the Statement of Total Return as finance income or finance costs.
Financial liabilities at fair value through profit or loss comprise the collateral loan.
Other financial liabilities
Other financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to
initial recognition, other financial liabilities are measured at amortised cost using the effective interest method.
Other financial liabilities comprise trade and other payables, security deposits, medium term notes, term loans and short
term borrowings.
(iii) Derivative financial instruments and hedging activities
The Group holds derivative financial instruments to hedge its interest rate exposure. Derivative financial instruments are
recognised initially at fair value and attributable transaction costs are recognised in the Statement of Total Return when
incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as
described below:
Cash flow hedges
Changes in the fair value of derivative hedging instruments designated as cash flow hedges are recognised directly in
Unitholders’ funds to the extent that the hedge is effective. The effective portion of the change in fair value of the derivative
is taken to the hedging reserve in Unitholders’ funds. The amount recognised in the hedging reserve in Unitholders’ funds is
removed and included in Statement of Total Return in the same period as the hedged cash flows affect Statement of Total
Return under the same line item in the Statement of Total Return as the hedged item. Any ineffective portions of changes in
fair value are recognised in the Statement of Total Return.
If the hedging instrument no longer meets the criteria for hedge accounting, expires, or is sold, terminated or exercised,
hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in Unitholders’ funds
remains there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognised
in the Unitholders’ funds is transferred to the carrying amount of the asset when it is recognised. If the forecast transaction
is no longer expected to occur, then the balance in Unitholders’ funds is recognised immediately in the Statement of Total
Return. In other cases, the amount recognised in Unitholders’ funds is transferred to the Statement of Total Return in the
same period that the hedged item affects the Statement of Total Return.