Financial instruments
The company has elected to apply the provisions of Secon 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilies 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 sele on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are inially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effecitve interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Classification of financial liabilies
Financial liabilies 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 aer deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, are inially recognised at transaciton 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. Financial liabilies classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amorstied cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilies if payment is due within one year or less. If not, they are presented as non-current liabilies. Trade creditors are recognised inially at transaction price and subsequently measured at amortised cost using the effective interest method.