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Integrated Report 2016
ANNUAL FINANCIAL STATEMENTS
(continued)
FINANCIAL ASSETS
INITIAL RECOGNITION AND MEASUREMENT
Financial assets within the scope of IAS 39 are classified as financial assets through profit or loss, loans and receivables, held-to-maturity
investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
The Group determines the classification of its financial assets at initial recognition.
The Group’s classification of financial assets is as follows:
Description of asset
Classification
Amounts owing by Group companies
Loans and receivables
Trade and other receivables
Loans and receivables
Cash and cash equivalents
Loans and receivables
Investments
Available-for-sale
Other financial assets
Loans and receivables/Available-for-sale
All financial assets are recognised initially at fair value plus, in the case of instruments not at fair value through profit or loss, directly attributable
transaction costs.
SUBSEQUENT MEASUREMENT
The subsequent measurement of financial assets depends on their classification, as follows:
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an activemarket. After initial
measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method, less impairment.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of
the effective interest rate. The effective interest rate amortisation is included in finance income in the statement of comprehensive income.
The losses arising from impairment are recognised in the statement of comprehensive income in fixed and administrative expenses.
Available-for-sale financial assets
Available-for-sale financial assets could include equity investments. Equity investments classified as available-for-sale are those which are
neither classified as held for trading nor designated as fair value through profit or loss.
After initial measurement, available-for-sale financial assets are subsequently measured at fair value with unrealised gains and losses recognised
as other comprehensive income until the investment is derecognised, at which time the cumulative gain or loss is recognised in fixed and
administrative expenses. If determined to be impaired, the cumulative loss is reclassified from the available-for-sale reserve to profit or loss in
the statement of comprehensive income.
When a decline in the fair value of an available-for-sale financial asset has been recognised in other comprehensive income and there is
objective evidence that the asset is impaired by a significant amount or for a prolonged period of time, the cumulative impairment loss that
had been recognised in other comprehensive income is reclassified from equity to profit or loss even though the financial asset has not
been derecognised.
DERECOGNITION
Financial assets or parts thereof are derecognised when:
•
the right to receive the cash flows has expired; or
•
the Group transfers the right to receive the cash flows, and also transfers either all the risks and rewards, or control over the asset.
When the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks
and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the
asset. In that case, the Group also recognises an associated liability.
The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.
ANNEXURE I – ACCOUNTING POLICIES
CONTINUED