The company has elected to apply the provisions of Section 11 'Basic Financial Instruments' and Section 12 'OtherFinancial Instruments Issues' of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's statement of financial position 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 alegally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or torealise the asset and settle the liability simultaneously.
Basic financial assets, which include trade and other receivables and cash 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 transaction 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, including trade and other payables, bank loans, loans from fellow group companies and
preference shares that are classified as debt, 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 receipts
discounted at a market rate of interest.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business
from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not,
they are presented as non-current liabilities. Trade payables are recognised initially at transaction price and
subsequently measured at amortised cost using the effective interest method.
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends
payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.