Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12
‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised when the company becomes party to the contractual provisions of the
instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when
there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a
net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include amounts due from fellow group undertakings, other debtors and bank
balances, are initially measured at transaction price including transaction costs and are subsequently carried
at amortised cost using the effective interest method unless the arrangement constitutes a financing
transaction, where the financial asset is measured at the present value of the future receipts discounted at a
market rate of interest.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual
arrangements entered into. An equity instrument is any contract that evidences a residual interest in the
assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including trade and other creditors are initially recognised at transaction price unless
the arrangement constitutes a financing transaction, where the debt instrument is measured at the present
value of the future payments discounted at a market rate of interest.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Equity instruments
Equity instruments issued by the company are recorded at the fair value of proceeds received, net of
transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no
longer at the discretion of the company.