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the cash flow hedge reserve to profit or loss (finance expense) at the same time as the
related hedged interest expense is recognised.
3.10 Equity instruments
Equity instruments issued by the Company are recorded at the amount of the proceeds
received, net of directly attributable issue costs. Costs not directly attributable to the issue
are immediately expensed in profit or loss.
Further details of the accounting for the proceeds from the issue of shares in the period are
disclosed in note 16.
3.11 Fair value measurements and hierarchy
Fair value is the price that would be received on the sale of an asset, or paid to transfer a
liability, in an orderly transaction between market participants at the measurement date. The
fair value measurement is based on the presumption that the transaction takes place either
in the principal market for the asset or liability, or in the absence of a principal market, in the
most advantageous market. It is based on the assumptions that market participants would
use when pricing the asset or liability, assuming they act in their economic best interest. A
fair value measurement of a non-financial asset takes into account the best and highest
value use for that asset.
The fair value hierarchy to be applied under IFRS 13 is as follows:
Level 1: Quoted (unadjusted) market prices in active markets for identical assets or
liabilities.
Level 2: Valuation techniques for which the lowest level input that is significant to the fair
value measurement is directly or indirectly observable.
Level 3: Valuation techniques for which the lowest level input that is significant to the fair
value measurement is unobservable.
For assets and liabilities that are carried at fair value and which will be recorded in the
financial statements on a recurring basis, the Group will determine whether transfers have
occurred between levels in the hierarchy by reassessing categorization at the end of each
reporting period.
NOTES TO THE FINANCIAL STATEMENTS
4. Rental income
1 June 2017 to
31 December 2017
£' 000
Rental income - freehold property
1,408
Rental income - long leasehold property
1,743
Total rental income
3,151
Included within rental income is a £131,000 rent smoothing adjustment that arises as a
result of IAS 17 'Leases' requiring that rental income in respect of leases with rents
increasing by a fixed percentage to be accounted for on straight line basis over the lease
term. During the period this resulted in an increase in rental income and an offsetting entry
being recognised in profit or loss as an increase in the deficit on investment property
revaluation.