2012 Integrated report - Sappi

29.2 Financial instruments continued
Fair values
All financial instruments are carried at fair value or amounts that approximate fair value except for the non-current interest-bearing
borrowings at fixed rates of interest. The carrying amounts for cash, cash equivalents, accounts receivable, certain investments, accounts
payable and current portion of interest-bearing borrowings approximate fair value due to the short-term nature of these instruments.
Where these fixed rates of interest have been hedged into variable rates of interest and fair value hedge accounting has been applied,
then the non-current interest-bearing borrowings are carried at fair value calculated by discounting all future cash flows at market data
valid at closing date. The same data is used to value the related hedging instrument.
The best evidence of the fair value of a financial asset or financial liability at initial recognition is the transaction price, unless the fair value
of the instrument is evidenced by comparison with other current observable market transactions. Where market prices or rates are
available, such market data is used to determine the fair value of financial assets and financial liabilities.
If quoted market prices are unavailable, the fair value of financial assets and financial liabilities is calculated using pricing models or
discounted cash flow techniques. Where discounted cash flow techniques are used, estimated future cash flows are based on
management’s best estimates and the discount rate used is a market related rate at the balance sheet date for an instrument with similar
terms and conditions. Where pricing models are used, market related inputs are used to measure fair value at the balance sheet date.
Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably
measured, are measured at cost.
Fair values of foreign exchange and interest rate derivatives are calculated by using recognised treasury tools which use discounted cash
flow techniques based on effective market data valid at closing date. The fair values of loan commitments are based on the commitment
fees effectively paid.
US$ million
September 2012
Total
balance
IAS 39 (1) or loss receivables maturity
Categories according to IAS 39
Out of
scope
Fair value
through
profit
Loans
and Held to
Availablefor-sale
Total in
scope
Classes of financial
instruments
NON-CURRENT ASSETS
Other non-current assets (2) 80 58 – 2 – 20 22 22
Loans to associates
(minority interests) – – 2 – – 2 2
Club debentures – – – – 3 3 3
Investment funds – – – – 17 17 17
Other assets 58 – – – – – –
Non-current derivative
financial assets 22 – 22 – – – 22 22
CURRENT ASSETS
Trade and other receivables 807 84 – 723 – – 723 723
Trade receivables – – 628 – – 628 628
Other accounts
receivable – current 84 – 95 – – 95 95
Current derivative
financial assets – – – – – – –
Fair
value
Cash and cash equivalents 645 – – 645 – – 645 645
Overnight deposits and current
accounts (including petty cash) – – 149 – – 149 149
Time deposits (< 3 months) – – 444 – – 444 444
Money market funds – – 52 – – 52 52
(1) This refers to items that are outside the scope of IAS 39.
(2) Includes licence fees and brands (refer to note 12).
sappi Integrated Report 2012 167