The Company has elected to apply the provisions of Section 11 “Basic Financial
Instruments” of FRS 102 to all of its financial instruments.
Basic financial assets
Basic financial assets, which include trade and other receivables, cash and bank balances,
are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any
provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Company's cash
and cash equivalents, trade and most other receivables due with the operating cycle fall
into this category of financial instruments.
Other financial assets
Other financial assets, which includes investments in equity instruments which are not
classified as subsidiaries, associates or joint ventures, are initially measured at fair value,
which is normally the recognised transaction price. Such assets are subsequently
measured at fair value with the changes in fair value being recognised in the profit or loss.
Where other financial assets are not publicly traded, hence their fair value cannot be
measured reliably, they are measured at cost less impairment.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the
contractual arrangements entered into. An equity instruments any contract that evidences a
residual interest in the assets of the Company after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans and other
loans are initially measured at their transaction price after transaction costs. When this
constitutes a financing transaction, whereby the debt instrument is measured at the present
value of the future payments discounted at a market rate of interest. Discounting is omitted
where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective
interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in
the ordinary course of business from suppliers. Trade payables are classified as current
liabilities if the payment is due within one year. If not, they represent non-current liabilities.
Trade payables are initially recognised at their transaction price and subsequently are
measured at amortised cost using the effective interest method. Discounting is omitted
where the effect of discounting is immaterial.