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NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
continued
For the year ended 31 May 2016
BLUE LABEL INTEGRATED ANNUAL REPORT 2016
112
3.
Financial instruments and financial risks
Financial instruments carried on the statement of financial position include:
Loans and receivables
•
Loans receivable
•
Trade and other receivables
•
Cash and cash equivalents
Financial liabilities
•
Borrowings
•
Trade and other payables
The Group recognises a financial asset or a financial liability on its statement of financial position when, and only
when, the Group becomes a party to the contractual provisions of the instrument.
Financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or
loss, any directly attributable transaction costs.
Subsequent recognition is dependent on how financial instruments are classified on initial recognition. IAS 39 has
several categories but the group only has financial instruments classified as loans and receivables, fair value through
profit and loss and financial liabilities at amortised cost. Financial assets are only derecognised when the criteria for
derecognition in IAS 39 are achieved.
Category
Measurement
Loans and receivables
•
Loans receivable
•
Trade and other receivables
•
Starter pack assets
•
Cash and cash equivalents
Amortised cost using the effective interest method with interest
recognised in interest income, less any impairment losses which are
recognised as part of credit impairment charges.
Directly attributable transaction costs and fees received are capitalised and
amortised through interest income as part of the effective interest rate.
Fair value through profit and loss
•
Contingent purchase consideration
•
Contingent consideration receivable
Fair value, with gains and losses recognised in profit and loss.
Financial liabilities
•
Borrowings
•
Trade and other payables
Amortised cost using the effective interest method with interest
recognised in interest expense.
Directly attributable transaction costs and fees received are capitalised and
amortised through interest expense as part of the effective interest rate.
Impairment of financial assets
A financial asset is impaired if objective evidence indicates that a loss event has occurred after initial recognition
which has a negative effect on the estimated future cash flows of the financial asset that can be estimated reliably.
The Group assesses at each reporting date whether there is objective evidence that a financial asset which is carried
at amortised cost is impaired.
When a receivable is uncollectible, it is written off against the provision. Subsequent recoveries of amounts
previously written off are credited to the income statement.