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3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(e) Financial instruments (Continued)
(iv) Derivative financial instruments
The Group primarily holds derivative financial instruments to hedge its interest rate risk exposures.
Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or
loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes
therein are accounted for in profit or loss.
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 profit or loss, the effective portion of changes in the fair value of
the derivative is recognised in other comprehensive income and presented in the hedging reserve in
equity. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in
profit or loss.
When the hedged item is a non-financial asset, the amount accumulated in equity is included in the
carrying amount of the asset when the asset is recognised. In other cases, the amount accumulated
in equity is reclassified to profit or loss in the same period that the hedged item affects profit or loss. If
the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated
or 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 equity is reclassified to profit
or loss.
(v) Intra-group financial guarantees
Financial guarantees are financial instruments issued by the Group that require the issuer to make
specified payments to reimburse the holder for the loss it incurs because a specified debtor fails to meet
payment when due in accordance with the original or modified terms of a debt instrument.
Financial guarantees are recognised initially at fair value and are classified as financial liabilities.
Subsequent to initial measurement, the financial guarantees are stated at the higher of the initial fair
value less cumulative amortisation and the amount that would be recognised if they were accounted for
as contingent liabilities. When financial guarantees are terminated before their original expiry date, the
carrying amount of the financial guarantee is transferred to profit or loss.
(f) Unitholders’ funds
Unitholders’ funds represent the Unitholders’ share of all net cash proceeds derived from the realisation of the
assets of the Trust less any liabilities upon termination and 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.
When units are repurchased and cancelled, the amount of the consideration paid, which includes directly
attributable costs, net of any tax effects, is recognised as a deduction from unitholders’ funds.
SAR1112034_TCT_AR_().indb 75 3/23/2012