Hyprop Investments Limited Integrated annual report 2017

Notes to the consolidated

financial statements

continued

for the year ended 30 June 2017

102

Hyprop Investments Limited

Integrated annual report and consolidated financial statements

2017

Accounting policies and presentation of consolidated financial statements

continued

1.12

Financial instruments

continued

Offset

Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position, when the group

has an enforceable right to set off the recognised amounts, and intends to settle on a net basis or to realise the asset and settle the liability

simultaneously.

Subsequent measurement

Subsequent to initial recognition, these instruments are measured as follows:

Financial assets

1.12.1

Cash and cash equivalents

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an

insignificant risk of changes in value. Cash and cash equivalents are measured at amortised cost. Interest earned on cash invested with

financial institutions is recognised on an accrual basis using the effective interest method.

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 accumulated impairments. Interest earned is

recognised on an accrual basis using the effective interest method.

1.12.4

Other investments

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 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 its share of the net distributable earnings, the financial asset is 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

consolidated statement of profit or loss and other comprehensive income.

Any gain or loss on initial recognition is deferred as the valuation method includes assumptions which are derived from unobservable inputs

and is recognised in profit and 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

Financial guarantee liabilities are recognised initially at fair value and subsequently at the higher of the amount determined in accordance

with IAS 37

Provisions, contingent liabilities and contingent assets

, as follows:

■■

Its initial amount (less amortisation, if appropriate); or

■■

The amount that it is probable that the group will pay (based on it being likely that the guarantee will be called).

At year-end, the group had issued guarantees to certain banks in respect of credit facilities granted to related companies.

Derivative instruments

Derivatives are initially measured at fair value. Any directly attributable transaction costs are recognised in profit or loss as incurred.