NOTES TO THE
FINANCIAL STATEMENTS
Year ended 31 December 2014
3
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.4 Financial instruments (cont’d)
The Group has the following non-derivative financial liabilities: loans and borrowings, trade and other payables,
and security deposits payable.
Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective
interest method.
Unitholders’ funds
Unitholders’ funds are classified as equity. Incremental costs directly attributable to the issue of units are recognised
as a deduction from equity, net of any tax effects.
Derivative financial instruments, including hedge accounting
The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures.
On initial designation of the derivative as the hedging instrument, the Group formally documents the relationship
between the hedging instrument(s) and hedged item(s), including the risk management objectives and strategy in
undertaking the hedge transaction and the hedged risk, together with the methods that will be used to assess the
effectiveness of the hedging relationship. The Group makes an assessment, both at the inception of the hedge
relationship as well as on an ongoing basis, whether the hedging instruments are expected to be “highly effective”
in offsetting the changes in the fair value or cash flows of the respective hedged items attributable to the hedged
risk, and whether the actual results of each hedge are within a range of 80%-125%. For a cash flow hedge of
a forecast transaction, the transaction should be highly probable to occur and should present an exposure to
variations in cash flows that could ultimately affect reported profit or loss.
Derivatives are recognised initially at fair value; any attributable transaction costs are recognised in the Statement
of Total Return as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes
therein are accounted for as described below.
Cash flow hedges
When a derivative is designated as the hedging instrument in a hedge of the variability in cash flows attributable to
a particular risk associated with a recognised asset or liability or a highly probable forecast transaction that could
affect the Statement of Total Return, the effective portion of changes in the fair value of the derivative is recognised
in the hedging reserve in Unitholders’ funds. The amount recognised in hedging reserve is removed and included
in the Statement of Total Return in the same period as the hedged cash flows affect profit or loss under the same
line item in the Statement of Total Return as the hedged item. Any ineffective portion of changes in the fair value
of the derivative is recognised immediately in the Statement of Total Return.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated,
exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. If the forecast
transaction is no longer expected to occur, then the balance in the hedging reserve is recognised immediately in
the Statement of Total Return. In other cases, the amount recognised in the hedging reserve is transferred to the
Statement of Total Return in the same period that the hedged item affects the Statement of Total Return.
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