Basic financial instruments are recognised at amortised cost, except for investments in non-convertible and non-puttable ordinary shares which are measured at fair value, with changes recognised in the profit or loss. Derivative financial instruments are initially recorded at cost and thereafter at fair value with changes recognised in the profit or loss.
The Company considers evidence of impairment for these assets at both an individual asset and collective level. All individually significant assets are individually assessed for impairment. Individual assets are impaired when objective evidence is available, including:
- significant financial difficulty of the issuer;
- a breach of contract including default of the payment terms;
- indications that a debtor or issuer will enter bankruptcy;
- observable data indicating that there is a measurable decrease in the expected cash flows from a group of financial assets.
An impairment loss is calculated as the difference between an asset's carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate. Losses are recognised in the profit and loss and are reflected in an allowance account. When the company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.