Accounting Policies

Derivative Financial Instruments

Derivative financial instruments are initially recognised at fair value on the contract date and are subsequently measured at their fair value at each balance sheet date. The method of recognising the resulting fair value gain or loss depends on whether the derivative is designated as a hedging instrument and the nature of the item being hedged. At 29 November 2015 the Group's derivative financial instruments consist of commodity swap contracts which are designated as cash flow hedges of highly probable transactions. At 30 November 2014 the Group's derivative financial instruments consisted of forward foreign exchange contracts.

The Group documents at the inception of the hedge the relationship between hedging instruments and hedged items, the risk management objectives and strategy and its assessment of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

This assessment is performed retrospectively at each financial reporting period. Movements on the hedging reserve within shareholders' equity are shown in the Consolidated statement of comprehensive income. The full fair value of hedging derivatives is classified as current when the remaining maturity of the hedged item is less than 12 months.

Cash Flow Hedging

The effective portion of changes in the fair value of derivatives that are designated as cash flow hedges and qualify for hedge accounting is recognised in other comprehensive income. Amounts accumulated through other comprehensive income are recycled in the income statement in the periods when the hedged item affects profit or loss. When the hedged forecast transaction results in the recognition of property, plant and equipment, the gains or losses previously deferred in equity are included in the initial cost of the asset and are ultimately recognised in profit or loss within the depreciation expense. During the period all of the Group's cash flow hedges were effective and there is therefore no ineffective portion recognised in profit or loss.

 29 November
2015
£m
30 November
2014
£m
Derivative Liability
Commodity swap contracts(0.7)
Forward foreign exchange contracts (cash flow hedges)(0.2)
 (0.7)(0.2)

Commodity Swap Contracts

The notional principal amounts of the outstanding commodity swap contracts at 29 November 2015 were £3.2 million (2014: £nil). The hedged highly probable forecast transactions are expected to occur at various dates during the next twelve months. Cumulative gains and losses of £1.1 million have been recognised in the hedging reserve within other comprehensive income of which £0.7 million is the balance at year end. These losses are recognised in the income statement in periods during which the hedged forecast transaction affects the income statement.

Forward Foreign Exchange Contracts

There were no outstanding forward foreign exchange contracts at 29 November 2015. The notional principal amounts of the outstanding forward foreign exchange contracts at 30 November 2014 were €3.8 million. The corresponding amount in sterling as at 30 November 2014 was 2014: £3.2 million.

There are no cumulative gains and losses recognised in the hedging reserve within other comprehensive income (2014: £0.4 million of losses). These gains were recognised in the income statement in periods during which the hedged forecast transaction affected the income statement, which for property, plant and equipment is over the useful life of the asset (3 to 10 years).