Hartpury Annual Report July 2025

Hartpury University Annual Report and Financial Statements > 2024/2025

Notes to the Financial Statements (continued) Year Ended 31 July 2025

Financial liabilities

Reserves

Basic financial liabilities include trade and other payables, bank loans, and intra-group loans. These liabilities are initially recognised at transaction price unless the arrangement constitutes a financing transaction. Where a financing transaction exists, the debt instrument is measured at the present value of the future payments discounted at a market rate of interest.

Reserves are classified as either restricted or unrestricted.

Restricted endowment reserves include balances that, through endowment to the Institution, are held as permanently restricted funds which the Institution must hold in perpetuity. Other restricted reserves include balances where the donor has specified a particular purpose for which the funds must be used and which must therefore be retained in accordance with those restrictions. Judgements in applying accounting policies and key sources of estimation uncertainty The preparation of the Institution’s financial statements requires management to make judgements, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income, and expenses. These judgements, estimates, and associated assumptions are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. By definition, the resulting accounting estimates will seldom equal the related actual results. Management considers the areas set out below to be those where critical accounting judgements have been applied and where the resulting estimates and assumptions may lead to adjustments to the future carrying amounts of assets and liabilities: 1. Recognition of income: Judgement is applied in determining the value and timing of certain income items recognised in the financial statements. This includes determining when performance-related conditions have been met. 2. Useful economic lives of property, plant and equipment: Property, plant and equipment represent a significant proportion of the Institution’s total assets. The estimated useful economic lives therefore have a significant impact on the depreciation charge and the Institution’s reported performance. Useful lives are determined at the time the asset is acquired and are based on historical experience with similar assets, as well as expectations of future events. Details of the carrying values of property, plant and equipment are shown in Note 9.

Debt instruments are subsequently carried at amortised cost using the effective interest rate method.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities where payment is due within one year or less. If payment is due after more than one year, they are presented as non-current liabilities. Trade payables are initially recognised at the transaction price and subsequently measured at amortised cost using the effective interest rate method. Derivatives, including forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date the derivative contract is entered into and are subsequently remeasured at their fair value at the reporting date. Changes in the fair value of derivatives are recognised in the Statement of Comprehensive Income within finance costs or finance income, as appropriate, unless they are included in a hedging arrangement. Where the Institution enters into forward foreign exchange contracts that remain unsettled at the reporting date, the fair value of the contracts is reviewed at that date. The initial fair value is measured as the transaction price at the date of inception of the contracts. Subsequent valuations are determined based on the forward rates for those unsettled contracts at the reporting date. The Institution does not apply hedge accounting in respect of forward foreign exchange contracts entered into to manage cash flow exposures of forecast transactions denominated in foreign currencies.

Financial liabilities are derecognised when the liability is discharged, cancelled, or expires.

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