The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities, income and expenses, and the disclosure of contingent assets and liabilities. These estimates and judgements are based on historical experience and other factors considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The critical judgements made by management that have a significant effect on the amounts recognised in the financial statements are described below.
The accounting treatment of the convertible bonds requires management to exercise judgement in assessing the appropriate classification and measurement of the instrument, including the treatment of the embedded conversion feature and the determination of an appropriate market rate of interest for discounting purposes on initial recognition.
A rate of 5% has been applied, based on management’s assessment of a comparable market rate for a similar instrument with equivalent risk characteristics and term.