55
FLEXIGROUP LIMITED FINANCIAL REPORT 2011
Leases in which a signifcant portion of the risks and rewards
of ownership are retained by the lessor are classifed as
operating leases (note 30). Payments made under operating
leases (net of any incentives received from the lessor) are
charged to the income statement on a straight-line basis
over the period of the lease.
In the event of the Group sub-leasing any of its operating
leases, the lease income is recognised on a straight-line
basis over the lease term.
n. Cash and cash equivalents
For statement of cash fows presentation purposes, cash
and cash equivalents includes cash on hand, deposits held
at call with fnancial institutions, other short-term, highly
liquid investments with original maturities of three months or
less that are readily convertible to known amounts of cash
and which are subject to an insignifcant risk of changes
in value, and bank overdrafts. Bank overdrafts are shown
within borrowings in current liabilities on the balance sheet.
o. Investments
The Group classifes its investments in the following
categories: fnancial assets at fair value through proft or
loss, loans and receivables, held-to-maturity investments,
and available-for-sale fnancial assets. The classifcation
depends on the purpose for which the investments were
acquired. Management determines the classifcation of its
investments at initial recognition and, in the case of assets
classifed as held-to-maturity, re-evaluates this designation
at the end of each reporting period.
i. Financial assets at fair value through proft or loss
Financial assets at fair value through proft or loss are
fnancial assets held for trading which are acquired
principally for the purpose of selling in the short term
with the intention of making a proft. Derivatives are also
categorised as held for trading unless they are designated
as hedges. Assets in this category are classifed as current
assets if they are expected to be settled within 12 months;
otherwise they are classifed as non-current.
The Group had no assets in this category at 30 June 2011.
ii. Loans and receivables
Loans and receivables are non-derivative fnancial assets
with fxed or determinable payments that are not quoted
in an active market. They arise when the Group provides
money, goods or services directly to a debtor with no
intention of selling the receivables. They are included in
current assets, except for those with maturities greater than
12 months after the balance sheet date (notes 8, 9, 12 and 13).
iii. Held-to-maturity investments
Held-to-maturity investments are non-derivative fnancial
assets with fxed or determinable payments and fxed
maturities that the Group’s management has the positive
intention and ability to hold to maturity.
The Group had no assets in this category at 30 June 2011.
iv. Available-for-sale fnancial assets
Available-for-sale fnancial assets, comprising principally
marketable equity securities, are non derivatives that are
either designated in this category or not classifed in any
of the other categories. They are included in non-current
assets unless the investment matures or management
intends to dispose of the investment within 12 months of
the end of the reporting period. Investments are designated
as available for sale if they do not have fxed maturities and
fxed or determinable payments and management intends
to hold them for the medium to long term.
The Group had no assets in this category at 30 June 2011.
p. Derivatives and hedging activities
Derivatives are initially recognised at fair value on the date
a derivative contract is entered into and are subsequently
remeasured to their fair value at the end of each reporting
period. The accounting for subsequent changes in fair
value depends on whether the derivative is designated
as a hedging instrument, and if so, the nature of the item
being hedged.
The Group designates all derivatives held as at 30 June
2011 as hedges of a particular risk associated with the cash
fows of recognised assets and liabilities and highly probable
forecast transactions (cash fow hedges).
The Group documents at the inception of the hedging
transaction the relationship between hedging instruments
and hedged items, as well as its risk management objective
and strategy for undertaking various hedge transactions.
The Group also documents its assessment, both at
hedge inception and on an ongoing basis, of whether the
derivatives that are used in hedging transactions have been,
and will continue to be, highly efective in ofsetting changes
in fair values or cash fows of hedged items.
The fair values of various derivative fnancial instruments
used for hedging purposes are disclosed in note 25.
Movements in the hedging reserve in shareholders’ equity
are shown in note 27. The full fair value of a hedging
derivative is classifed as a non-current asset or liability
when the remaining maturity of the hedged item is more
than 12 months; it is classifed as a current asset or liability
when the remaining maturity of the hedged item is less than
12 months. Trading derivatives are classifed as a current
asset or liability.