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(i) Fair value hierarchy and accounting
classification (continued)
Level 1:
The fair value of instruments traded in active
markets (such as publicly traded derivatives,
and trading and available-for-sale securities)
is based on quoted market prices at the end
of the reporting period. These instruments
are included in level 1.
Level 2:
The fair value of instruments that are not
traded in an active market (for example,
over-the-counter derivatives) is determined
using valuation techniques which maximise
the use of observable market data and rely
as little as possible on entity specific
estimates. If all significant inputs required
to fair value an instrument are observable,
the instrument is included in level 2.
Level 3:
If one or more of the significant inputs
is not based on observable market data,
the instrument is included in level 3.
Disclosed fair values
The carrying amounts of trade receivables
and payables, bonds, banking facilities,
cash and short term deposits equates
approximately to their fair values due to their
nature and are carried at amortised cost.
All investments in shares are held at cost.
There were no transfers between levels 1,
2 and 3 for recurring fair value measurements
during the current or the previous financial
year. The Group’s policy is to recognise
transfers into and transfers out of fair
value hierarchy levels as at the end of the
reporting period.
(ii) Valuation techniques used to
determine fair values
Specific valuation techniques used to
value financial instruments include:
•
•
The fair value of interest rate swaps is
calculated as the present value of the
estimated future cash flows based on
observable yield curves. The present
values and discounted rates used were
adjusted for counterparty and own
credit risk and are not considered a
significant input.
•
•
the fair value of forward foreign exchange
contracts is determined using forward
exchange rates at the balance sheet date
•
•
The fair value of infrastructure assets is
determined using risk adjusted discounted
cash flow projections based on reasonable
estimates of future cash flows.
NOTE 11
FINANCIAL RISK MANAGEMENT (CONTINUED)
(d) Fair value measurements (continued)