housing - National Housing Finance Corporation

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GROUP ACCOUNTING POLICIES CONTINUED 2. BASIS OF PREPARATION (continued) Financial assets at fair value through profit and loss Financial assets classified as held for trading are included in the category “financial assets at fair value through profit or loss”. Financial assets are classified as held for trading if they are acquired for the purposes of selling in the near term. Gains or losses on investments held for trading are recognised in income. Held-to-maturity investments Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-tomaturity when the Group has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not included in this classification. Other long-term investments that are intended to be held to maturity, such as bonds, are subsequently measured at amortised cost. This cost is computed at the amount initially recognised minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initially recognised amount and the maturity amount. This calculation includes all fees received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premium and discounts. For investment carried at amortised cost, gains and losses are recognised in income when the investments are derecognised or impaired, as well as through the amortisation process. Loans and advances Loans and advances are non-derivative financial assets with fixed or determinable payment that are not quoted in an active market. Such assets are carried at amortised cost using the effective-interest method. Gains and losses are recognised in income when the loans and advances are derecognised or impaired, as well as through the amortisation process. Available-for-sale financial assets Available-for-sale financial assets are those non-derivative financial assets that are designated as available-for-sale or are not classified in any of the three preceding categories. After initial recognition, available-for-sale financial assets are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is included in the income statement. The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid price at the close of business on the balance sheet date. For investments where there is no active market, fair value is determined using valuation techniques. Such techniques include using recent arm’s length market transaction; reference to the current market value of another instrument, which is substantially the same; discounted cash flow analysis and option pricing models. Trade and other receivables Trade and other receivables are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. Provision is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified. Short-term receivables are not discounted unless the effect is material. 34 NHFC ANNUAL REPORT 2006
GROUP ACCOUNTING POLICIES CONTINUED 2. BASIS OF PREPARATION (continued) Cash and cash equivalents Cash and short-term deposits in the balance sheet comprise cash at banks and in hand and short-term deposits with an original maturity of less than twelve (12) months. For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash equivalents as defined above, net of outstanding bank overdrafts. Interest-bearing loans and borrowings All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective-interest method. Gains and losses are recognised in net profit or loss when the liabilities are derecognised as well as through the amortisation process. Derecognition of financial assets A financial asset is derecognised when the right to receive cash flows from the asset has expired or the Group has transferred its rights to receive cash and a) has transferred substantially all the risks and rewards of the asset; or b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. Derecognition of financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Impairment of financial assets Assets carried at amortised cost If there is objective evidence that an impairment loss on loans and advances carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The amount of the loss shall be recognised in profit or loss. The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial assets with similar credit risk characteristics and that group of financial assets is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment is recognised in the income statement, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date. NHFC ANNUAL REPORT 2006 35
Page 1 and 2: A N N U A L R E P O R T 2 0 0 6 u O
Page 4 and 5: A TRIBUTE TO OUR CHAIRMAN IN MEMORY
Page 6 and 7: KEY FINANCIAL FEATURES 2006 % 2005
Page 8 and 9: HIGHLIGHTS NHFC - TEN YEARS ON NHFC
Page 10 and 11: BOARD OF DIRECTORS Mr Tim Middleton
Page 12 and 13: “EVERY TIME YOU ARE TEMPTED TO RE
Page 14 and 15: CHIEF EXECUTIVE’S REPORT CONTINUE
Page 16 and 17: CHIEF EXECUTIVE’S REPORT CONTINUE
Page 18 and 19: CORPORATE GOVERNANCE INTRODUCTION C
Page 20 and 21: CORPORATE GOVERNANCE CONTINUED Boar
Page 22 and 23: CORPORATE GOVERNANCE CONTINUED MCC
Page 24 and 25: CORPORATE GOVERNANCE CONTINUED inte
Page 26 and 27: ANNUAL FINANCIAL STATEMENTS FOR THE
Page 28 and 29: REPORT OF THE INDEPENDENT AUDITORS
Page 30 and 31: REPORT OF THE DIRECTORS The Directo
Page 32 and 33: BALANCE SHEETS AS AT 31 MARCH 2006
Page 34 and 35: STATEMENT OF CHANGES IN EQUITY FOR
Page 36 and 37: GROUP ACCOUNTING POLICIES 1. CORPOR
Page 40 and 41: GROUP ACCOUNTING POLICIES CONTINUED
Page 42 and 43: GROUP ACCOUNTING POLICIES CONTINUED
Page 44 and 45: NOTES TO THE ANNUAL FINANCIAL STATE
Page 72: ADMINISTRATION REGISTRATION NUMBER

housing - National Housing Finance Corporation

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