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notes to the financial Statements
for the year ended 31 March 2012
For all other financial assets, objective evidence of impairment could include:
significant financial difficulty of the issuer or counterparty; or
•
default or delinquency in interest or principal payments; or
•
it’s becoming probable that the borrower will enter bankruptcy or financial re-organisation.
•
For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired
individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment
for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase
in the number of delayed payments in the portfolio past the average credit period of 60 days, as well as
observable changes in national or local economic conditions that correlate with default on receivables.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the
asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial
asset’s original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets
with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance
account.
With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment
loss decreases and the decrease can be related objectively to an event occurring after the impairment was
recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the
carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised
cost would have been had the impairment not been recognised.
In respect of AFS equity instruments, impairment losses previously recognised through profit or loss are not
reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised
directly in other comprehensive income.
Financial liabilities and equity
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the
contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An
equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting
all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are
set out below.
Hedge accounting
Cash flow hedges
Derivative financial instruments are initially measured at fair value on the contract date, and revalued to fair
value at subsequent reporting dates. The resulting gain or loss is recognised in profit or loss immediately unless
the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition
in profit or loss depends on the nature of the hedge relationship.
Changes in the fair value of derivative financial instruments that are designated and effective as hedges
of future cash flows are recognised directly in other comprehensive income and the ineffective portion is
recognised immediately in profit or loss. For hedges that do not result in the recognition of an asset or a
liability, amounts deferred in equity are recognised in the consolidated statement of comprehensive income in
the same period period in which the hedged item affects profit or loss.
Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are
recognised in profit or loss as they arise.
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