The company has elected to apply the provisions of Section 11 'Basic Financial Instruments' and Section 12 'Other Financial Instruments' of FRS 102, to all of its financial instruments.
Financial Instruments are recognised when the company becomes party to the contractual provisions of the instrument.
Basic financial assets
Basic financial assets, which include trade and other debtors 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 method, except for short-term receivables when the effect of discounting is immaterial.
Basic financial liabilities
Basic financial liabilities including trade and other creditors are initially measured at transaction price, net of transacton costs.
Interest Bearing Loans and Borrowings
Interest bearing loans and overdrafts are initially measured at transaction price, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest method. Interest expenses calculated using the effective interest method are recognised over the term of the borrowings in the profit and loss.