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NOTES TO THE
FINANCIAL STATEMENTS
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 guarantee contracts are accounted for as insurance contracts and treated as
contingent liabilities until such time as they become probable that the Group will be
required to make a payment under the guarantee. A provision is recognised based on
the Group’s estimate of the ultimate cost of settling all claims incurred but unpaid at
the balance sheet date. The provision is assessed by reviewing individual claims and
tested for adequacy by comparing the amount recognised and the amount that would
be required to settle the guarantee contract.
(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.