Financial Statements 7
comprehensive income and presented in a separate cash flow hedge reserve. Any movement in fair value relating to ineffectiveness other than Group or counter party credit risk is recognised within comprehensive income. xxii Provision for liabilities Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event; it is probable that the Group will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. The Group closes retirement housing and care homes that are not financially viable in the ordinary course of business and provision is made accordingly for the expected costs of closure. xxiii Exceptional costs Exceptional items are those items that, in the directors’ view, are required to be separately disclosed by virtue of their nature or incidence to enable a full understanding of the Group’s financial performance. Details of these items are provided in the relevant notes. xxiv Joint arrangements that are not entities In March 2015 Hanover Housing Developments Limited became party to a joint arrangement with Hill Residential Limited, for the sharing of income and costs incurred in regard to a major development. Under FRS 102 where a company is party to a joint arrangement which is not an entity, the company accounts directly for its share of income and expenditure, assets, liabilities and cash flows. This share is similarly reported in the Group’s consolidated financial statements. xxv Operating surplus / (deficit) Operating surplus includes all turnover and costs relating to operations, including the surplus / (deficit) on disposal of assets used in the ordinary course of business. xxvi Operating Segments As there are publicly traded securities with the Group it is required to disclose information about the operating segments under IFRS 8. Segmental information is disclosed in notes 4.1, 4.2, 4.3 and 4.4 and as part of the analysis of housing properties in notes 12.1 and 12.2. Information about income, expenditure and assets attributable to material operating segments are presented on the basis of the nature and function of housing assets held by the Group rather than geographical location. As permitted by IFRS 8 this is appropriate on the basis of the similarity of the services provided, the nature of the risks associated, the type and class of customer and the nature of the regulatory environment across all of the geographical locations in which the Group operates. The Board does not routinely receive segmental information disaggregated by geographical location. xxvii Marketing costs Marketing costs are recognised when the marketing activity to which they relate has been delivered.
Other financial instruments not meeting the definition of basic financial instruments are recognised initially at transaction price less transaction costs. Subsequent to initial recognition other financial instruments are measured at fair value with changes recognised through the statement of comprehensive income except where they are designated as hedging instruments. In a designated hedging relationship cash flow hedges shall be recognised as set out below. Basic Financial Instruments Trade and other debtors Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment. If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present value of future payments discounted at a market rate of instrument for a Short-term creditors are measured at the transaction price plus any attributable transaction costs. Other financial liabilities, including bank loans, are measured initially at fair value, net of any attributable transaction costs and are measured subsequently at amortised cost using the effective interest method. Short-term deposits and investments All investments made by Anchor Hanover Group are short term deposits, defined as deposits placed in a bank or financial institution for a term no longer than one year. The investments are classified as basic and recognised at amortised cost using an effective interest rate. Long-term investments Anchor Hanover Group is required to set aside a debt service reserve as a condition of certain funding arrangements. These reserves are invested in the name of Anchor Hanover Group and cannot be redeemed until maturity of the underlying financial instruments. The investments are classified as basic and are initially measured at cost and subsequently recognised at amortised cost using the effective interest rate method. Other long-term creditors similar debt instrument. Trade and other creditors Other long-term creditors include the costs of arranging long-term funding and premiums received on the issue of bonds. These amounts are amortised over the period of the underlying financial instrument. Also included within other long-term creditors is the unamortised element of social housing grant less an amount due for amortisation in the following year. Derivative instruments and hedge accounting The Group holds floating rate loans which expose the Group to interest rate risk. To mitigate against this risk the Group uses interest rate swaps and these instruments are measured at fair value at each reporting date. They are carried as assets when the fair value is positive and as liabilities when the fair value is negative. The Group has designated the swaps against existing floating rate debt. To the extent the hedge is effective, movements in fair value are recognised in other
77
Made with FlippingBook - PDF hosting