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Integrated Report 2016
ANNUAL FINANCIAL STATEMENTS
(continued)
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings, plus directly attributable transaction costs.
The Group has classified financial liabilities, as follows:
Description of liability
Classification
Loans payable and borrowings
Loans and borrowings
Trade and other payables
Loans and borrowings
Loans from subsidiaries
Loans and borrowings
Bank overdraft
Loans and borrowings
Amounts owing to Group companies
Loans and borrowings
SUBSEQUENT MEASUREMENT
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate
method. Gains and losses are recognised in the statement of comprehensive income in profit or loss when the liabilities are derecognised as
well as through the effective interest rate method amortisation process.
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 costs in the statement of comprehensive income.
DERECOGNITION
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.
FAIR VALUE OF FINANCIAL INSTRUMENTS
To measure fair value, the Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available,
maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments measured at fair value by valuation
technique:
•
Level 1 – quoted (unadjusted) prices in active markets;
•
Level 2 – other valuation techniques for which all inputs which have a significant effect on the recorded fair value are observable, either
directly or indirectly; and
•
Level 3 – valuation techniques which use inputs which have a significant effect on the recorded fair value that are based on unobservable
market data.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics,
risks and the fair value hierarchy.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consists of cash on hand and at banks, short-term deposits with an original maturity of three months or less and
highly liquid investments.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits as detailed above, net of
outstanding bank overdrafts.
DERIVATIVE INSTRUMENTS
Derivatives are financial instruments whose value changes in response to an underlying factor, require no initial or little net investment and
are settled at a future date. Derivatives, other than those arising on designated hedges, are measured at fair value with changes in fair value
being recognised in profit or loss.
HEDGE ACCOUNTING
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes to
apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification
of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging
ANNEXURE I – ACCOUNTING POLICIES
CONTINUED