Strategic report Governance Financial statements Other information SECTION 2: ASSETS AND LIABILITIES NOTES TO THE GROUP FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONTINUED 2.5 Derivative financial instruments 2.6 Trade and other receivables The Group enters into short–term derivative financial instruments as a result of the currency Financial assets are recognised in the Group’s statement of financial position when the Group service and overseas trading services offered to its clients. Derivatives are initially recognised at becomes a party to the contractual provisions of the instrument and are initially measured at fair value at the date a derivative contract is entered into, and are subsequently remeasured to their fair value. fair value at the end of each reporting period, if applicable. The resulting gain or loss is recognised Trade and other receivables immediately in the income statement. Trade and other receivables comprise fees due from clients and counterparty positions. They are A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a subsequently measured at amortised cost using the effective interest method less any expected negative fair value is recognised as a financial liability. Derivatives are not offset in the financial credit losses. The financial assets are held in order to collect the contractual cash flows and those statements unless the Group has both legal right and intention to offset. cash flows are payments of interest and principal only. The Group recognises Expected Credit Losses (ECLs) relating to trade receivables in line with the simplified approach per IFRS 9 and Year ended Year ended calculated based on the historic information available from the preceding years alongside factors 30 June 2021 30 June 2020 impacting the individual debtors, economic conditions and forecast expectations. Impairment £m £m losses are recognised immediately in the Income Statement. Assets – 0.1 Liabilities 0.1 Term deposits – Term deposits comprise cash deposits held by UK licensed banks for a period of greater than three months, over which there is no recall during the term of the deposit. The amounts are measured at Derivative contracts are short term counterparty positions between the Group, its clients and third amortised cost using the effective interest method in line with IFRS 9. parties in the market. As a result there are derivative liabilities and derivative assets presented in the statement of financial position in respect of open positions. During the year, the Group stopped Accrued income offering a direct to client currency service and as a result all positions were closed, leading to no Accrued income relates to amounts earned by the Group, for which the Group has provided derivative positions at year end. services, but balances are billed in arrears and as such are not yet due. The amount relates to fund management fees, interest on deposits and services direct to clients. All derivative positions are recognised as current assets or liabilities. £0.6 million (2020: £1.7 million) of gains have been made, on a net basis, as a result of the fair value Year ended Year ended movements on derivatives in the year. 30 June 2021 30 June 2020 £m £m Financial assets: Trade receivables 744.5 663.8 Term deposits 60.0 230.0 Accrued income 46.7 64.6 Other receivables 4.1 2.6 855.3 961.0 Non-financial assets: Prepayments 13.9 12.2 869.2 973.2 155 Hargreaves Lansdown Report and Financial Statements 2021