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 rate method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of future receipts discounted at a market rate of interest.
2.15. Impairment of Financial Assets
Basic financial assets are assessed for indicators of impairment at each reporting date. Financial asset are impaired where there is objective evidence that, as a result of one or more events that occured after initial recognition of the financial asset, the estimated future cash have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows dicounted at the asset's original effective interest rate. The impairment loss is recognised in the profit and loss.
2.16. Derecognition of Financial Assets
Financial assets are derecognised only when the contractual rights to the cash flows from the assets expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
2.17. Classification of Financial Liabilities
Financial liabilities are classified according to the substance of the contractual arrangement entered into. Basic financial liabilities, including trade and other payables, bank loans and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where debt instrument is measured at the present value of the future 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.
2.18. Derecognition of Financial Liabilities
Financial liabilities are derecognised when the company's contractual obligations expire or are discharged or cancelled.
The carrying amounts of the company's financial assets and liabilities at the year end are disclosed in the notes to the financial statements.