The company applies FRS 102 Sections 11 and 12 to its financial instruments. In the current year the company holds basic financial instruments only (cash; trade and other receivables excluding VAT; trade and other payables; and directors’ current accounts). No derivatives or complex instruments were entered into during the year.
Recognition and measurement
Financial instruments are recognised when the company becomes party to the contractual provisions of the instrument and are initially measured at transaction price (including transaction costs). Subsequently, basic financial assets and liabilities are measured at amortised cost; given their short‑term nature, carrying amounts approximate fair value.
Trade and other creditors
Trade creditors are obligations to pay for goods or services acquired in the ordinary course of business. Amounts payable are classified as current if due within one year; otherwise they are presented as non current. Trade creditors are initially recognised at transaction price.
Other creditors
Other creditors are obligations for goods or services other than trade creditors (including legal costs and associated expenses). Amounts payable are classified as current liabilities and are recognised at transaction price.
Other debtors
Other debtors are amounts due from parties other than trade debtors (including arbitration awards, compensation and associated legal payments). Amounts receivable are classified as current assets and are recognised at transaction price.
Impairment of financial assets
At each reporting date the company assesses whether there is objective evidence that a financial asset measured at cost or amortised cost is impaired; any loss is recognised in profit or loss.
Offsetting
Financial assets and liabilities are offset only when there is a legally enforceable right to set off the recognised amounts and an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, and short term highly liquid deposits with original maturities of three months or less.
Directors’ current accounts
Amounts due to directors are interest free.
Risk disclosures (brief, Section 1A)
a) Credit risk: arises principally on trade and other receivables (including legal/settlement receivables). Management monitors recoverability and records impairment where required.
b) Liquidity risk: liabilities are primarily current trade/other payables and directors’ current accounts; management monitors cash resources to meet obligations as they fall due.
c) Market/FX risk: some receivables and payables are denominated in EUR/GBP; foreign currency monetary items are retranslated at the closing rate with exchange differences recognised in profit or loss.
d) Interest rate risk: the company has no bank loans or other interest bearing borrowings; finance costs in the year comprised bank charges only.
Fair values
Given the short term nature and basic terms of the company’s financial instruments, carrying amounts approximate fair value.