NOTES TO THE FINANCIAL STATEMENTS
11 Derivative financial instruments
Group and Trust
2014
2013
$’000
$’000
Non-current asset
Interest rate swaps
107
227
Current Asset
Interest rate swaps
180
–
Current liability
Interest rate swaps
–
(1,161)
Total derivative assets/(liabilities)
287
(934)
Derivative financial instruments as a percentage of net assets
0.03%
0.11%
Interest rate swaps
The Group manages its exposure to interest rate movements on its floating rate loans and borrowings by
entering into interest rate swaps. As at reporting date, the Group has interest rate swaps with a total notional
amount of $250.0 million (2013: $250.0 million) to provide fixed rate funding for approximately 2.1 years at a
weighted average effective interest rate of 0.73% (2013: 0.81%) per annum.
Offsetting financial assets and financial liabilities
The Group’s derivative transactions that are not transacted on an exchange are entered into under International
Swaps and Derivatives Association (ISDA) Master Netting Agreements. In general, under such agreements the
amounts owed by each counterparty that are due on a single day in respect of all transactions outstanding in
the same currency under the agreement are aggregated into a single net amount being payable by one party to
the other. In certain circumstances, for example when a credit event such as a default occurs, all outstanding
transactions under the agreement are terminated, the termination value is assessed and only a single net amount
is due or payable in settlement of all transactions.
The above ISDA agreements do not meet the criteria for offsetting in the statement of financial position. This is
because a right of set-off of recognised amounts is enforceable only following an event of default, insolvency or
bankruptcy of the Group and of 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.
CAMBRIDGE INDUSTRIAL TRUST | A WINNING FORMULA
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