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Financial
Statements
141 Management Reports
26 CAPITAL AND FINANCIAL RISK MANAGEMENT (continued)
Accounting classifications and fair values (continued)
Estimation of fair value
The following summarises the significant methods and assumptions used in estimating the fair values of financial
instruments of the Group and Trust.
Investment Properties
Refer to Note 4 on details on the valuation methods used to arrive at the fair value of investment properties.
Financial derivatives
The fair value of non-deliverable forwards is based on banks’ quotes. These quotes are tested for reasonableness
by discounting the difference between the contractual forward price and the current forward price for the residual
maturity of the contract using a risk-free interest rate (based on government bonds).
The fair value of interest rate swaps is based on banks’ quotes. These quotes are tested for reasonableness by
discounting estimated future cash flows based on the terms and maturity of each contract and using market
interest rates for a similar instrument at the measurement date.
Interest-bearing borrowings
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal
and interest cash flows, discounted at the market rate of interest at the reporting date.
Other financial assets and liabilities
The carrying amounts of financial assets and liabilities with a maturity of less than one year (including trade
and other receivables, cash and cash equivalents, trade and other payables and current security deposits) are
assumed to approximate their fair values because of the short period to maturity. All other financial assets and
liabilities (non-current security deposits) are discounted to determine their fair values.
Interest rates used in determining fair values
The interest rates used to discount estimated cash flows, where applicable, are based on the forward yield curve
as at 31 December 2013 plus an adequate constant credit spread, and are as follows:
2013 2012
% p.a. % p.a.
Interest-bearing borrowings 1.04 – 6.77 1.02 – 7.04
Security deposits 1.85 1.98