Financial instruments
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 becomesparty to the contractual provisions of the instrument.
Financial assets and liabilities are offset , with the net amounts presented in the financial statements , when thereis 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
Basic financial assets, which include trade and other receivables and cash and bank balances, are initially measuredat transaction price including transaction costs and are subsequently carried at amortised cost using the effectiveinterest method unless the arrangement constitutes a financing transaction, where the transaction is measuredat thepresent 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 arrangementsentered into. An equity instrument is any contract that evidences a residual interest in the assets of the company afterdeducting all of its liabilities.
Basic financial liabilities, including trade and other payables, bank loans and preference shares that are classified asdebt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where thedebt 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 ofbusiness from suppliers. Accounts payable are classified as current liabilities if payment is due within one year orless. If not, they are presented as non-current liabilities. Trade payables are recognised initially at transaction priceand subsequently measured at amortised cost using the effective interest method.