12 DERIVATIVE FINANCIAL INSTRUMENTS
Group
Trust
2014
2013
2014
2013
$’000
$’000
$’000
$’000
Non-current assets
Profit rate swaps at fair value through
Statement of Total Return
154
–
154
–
Non-current liabilities
Profit rate swaps at fair value through
Statement of Total Return
(1,617)
(3,883)
(1,617)
(3,883)
Current liabilities
Profit rate swaps at fair value through
Statement of Total Return
–
(717)
–
(717)
Embedded derivatives relating to
Convertible Sukuk at fair value through
Statement of Total Return
(601)
(2,762)
–
–
(601)
(3,479)
–
(717)
Total derivative financial instruments
(2,064)
(7,362)
(1,463)
(4,600)
Derivative financial instruments
as a percentage of net assets
0.27%
0.97%
0.19%
0.61%
The Group uses profit rate swaps to manage its exposure to profit rate movements on its floating rate
bearing Term Commodity Murabaha Facilities by swapping the profit rates on a proportion of these term
loans from floating rates to fixed rates.
Profit rate swaps with a total notional amount of $165.0 million (2013: $352.8 million) had been entered
into at the reporting date to provide fixed rate funding for terms of 1.5 to 5 years (2013: 3 to 5 years) at a
weighted average profit rate of 3.57% (2013: 3.56%) per annum.
Offsetting financial assets and financial liabilities
The Group’s derivative transactions are entered into under International Derivatives Swaps and Dealers
Association (“ISDA”) Master Netting Agreements. The ISDA does not meet the criteria for offsetting in the
Statement of Financial Position. This is because it creates a right of set-off of recognised amounts that is
enforceable only following an event of default, insolvency or bankruptcy of the Group or the counterparties.
In addition the Group and its counterparties do not intend to settle on a net basis or to realise the assets
and settle the liabilities simultaneously.
As at 31 December 2014 and 31 December 2013, the Group’s derivative assets and liabilities do not have
any balances that are eligible for offsetting under the enforceable master netting arrangement.
Year ended 31 December 2014
NOTES TO THE FINANCIAL STATEMENTS
SABANA REIT
|
ANNUAL REPORT 2014
122
