content_image/160623.jpg
## (i) Fair value hedge 

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. 

If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to profit and loss over the period of maturity. 

## (ii) Cash flow hedge 

the effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in equity in the hedging reserve. the gain or loss relating to the ineffective portion is recognised immediately in the income statement. amounts accumulated in equity are recycled in the income statement in the periods when the hedged item will affect profit or loss (for instance when the forecast sale that is hedged takes place). however, when the forecast transaction that is hedged results in the recognition of a non-financial asset (for example, inventory) or a non-financial liability, the gains and losses previously deferred in equity are transferred from equity and included in the measurement of the initial cost or carrying amount of the asset or liability. 

When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement. 

## (iii) derivatives that do not qualify for hedge accounting 

Certain derivative instruments do not qualify for hedge accounting or hedge accounting has not been adopted. Changes in the fair value of these derivative instruments are recognised immediately in the income statement within ‘finance costs – net’. 

## (O) FAIR VALuE ESTIMATION 

the fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. 

the fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques. the fair value of forward exchange contracts is determined using forward exchange market rates at the balance sheet date. 

Quoted market prices or dealer quotes for similar instruments are used for long-term debt. other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. the fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. the fair value of forward foreign exchange contracts is determined using quoted forward exchange rates at the balance sheet date. 

the carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values. 

the only financial instruments held by the Group that are measured at fair value are over the counter derivatives. these derivatives have all been determined to be within level 2 (for the purposes of nZ IFrS 7) of the fair value hierarchy as all significant inputs required to ascertain the fair value of these derivatives are observable. 

## (P) PROPERTY, PLANT ANd EQuIPMENT 

all property, plant and equipment are stated at historical cost less depreciation and impairment. historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of any gains/losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. 

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. all other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. 

depreciation of property, plant and equipment is calculated using diminishing value method so as to expense the cost of the assets over their useful lives. the rates are as follows: 

<img src='content_image/160623.jpg'>

the assets’ residual value and useful lives are reviewed and adjusted if appropriate at each balance sheet date. 

Capital work in progress is not depreciated until available for use. an asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. 

