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NOTES TO THE FINANCIAL STATEMENTS
continued
for the year ended 30 June 2016
Hyprop Investments Limited
Group annual financial statements 2016
106
1.
Accounting policies and presentation of financial statements
continued
1.12 Financial instruments
continued
Financial assets
continued
1.12.2
Trade and other receivables
Trade and other receivables are carried at amortised cost less any accumulated impairments. An estimate is made of credit losses
based on a review of all outstanding amounts at year-end. Doubtful debts are provided for in the year in which they are identified,
with such movement taken to profit or loss for the period. Short-term receivables are measured at original invoice amount when the
effect of discounting is immaterial.
1.12.3
Loans receivable
Loans receivable are carried at amortised cost using the effective interest method, less any impairment. Interest earned is recognised
on an accrual basis using the effective interest method.
1.12.4
Other investment
An investment is an entity over which the company has no significant influence, through participation in the financial and operating
policy decisions of the investee.
Investments are measured at cost less any impairment where the fair value cannot be measured reliably. Impairment charges are
recognised in profit or loss. Any impairment losses are transferred to the non-distributable reserves in the statement of changes in equity.
1.12.5
Financial assets – right to receive dividends
Where the group has a contractual right to receive dividends, the financial asset has been designated at fair value through profit or
loss (FVTPL). Subsequent to initial recognition, it is measured at fair value and changes therein are recognised in the statement of
profit or loss and other comprehensive income.
Any gain or loss on initial recognition is deferred (when its fair value is calculated using significant unobservable inputs) and is
recognised in profit or loss only to the extent that it arises from a change in a factor (including time) that market participants would
take into account when pricing the asset.
Financial liabilities
1.12.6
Trade payables
Trade and other payables are measured at amortised cost. Short-term payables are measured at the original invoice amount when the
effect of discounting is immaterial.
1.12.7
Non-derivative financial liabilities: Borrowings
Non-derivative financial liabilities, comprising long-term interest-bearing loans, are initially measured at fair value, net of transaction
costs, and are subsequently measured at amortised cost using the effective interest method. Any difference between the proceeds
(net of transaction costs) and the settlement or redemption of borrowings, is recognised over the term of the borrowings in
accordance with the group’s accounting policy for borrowing costs.
1.12.8
Non-derivative financial liabilities: Financial guarantees
In certain instances, the group provides financial guarantees for loans granted to subsidiaries, joint ventures and other related
companies. At year-end, the group has issued guarantees to certain banks in respect of loan facilities granted to related companies.
Refer to note 6 – Investment in joint ventures
.
Derivative instruments
The entity uses derivative financial instruments to hedge its exposure to interest rate risk arising from its financing activities. Derivative
instruments have been designated by the group as instruments held for trading and are accounted for at fair value through profit or loss. Gains
or losses are transferred to non-distributable reserves in the statement of changes in equity.
The group holds interest rate swap instruments. The fair value of interest rate swaps is the estimated amount that the entity would receive
or pay to terminate the swap at the reporting date, taking into account current interest rates and the current creditworthiness of the swap
counterparties.
1.13 Impairment
Financial assets
Financial assets other than those at fair value through profit or loss are assessed at each reporting date to determine whether there is any
evidence of impairment. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a
negative effect on the estimated future cash flow of that asset. An impairment loss is recognised immediately in profit or loss.