( I ) fINANcIAl AsseTs
financial assets are classified into the following specific categories: financial assets “at fair value through the profit or loss” (fvTpl), “held to maturity investments”, and “loans and receivables”. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Investments are recognized at the contract date, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.
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( II ) fINANcIAl AsseTs AT fvTpl
financial assets are classified as at fvTpl where the asset is either
// held for trading or
// it is designated as at fvTpl.
financial assets at fvTpl are stated at fair value, with any resultant gain or loss recognized in profit or loss. The fair value is the estimated amount that a bank would receive or pay to termin- ate the derivative contracts at the reporting date, taking into account current exchange rates, volatility and the credit-worthiness of the counterparties (mark-to-market).
( III ) held TO mATURITy INvesTmeNTs
Investments with fixed or determinable payments and fixed maturity dates that the company intends to hold to maturity are classified as held to maturity investments. held to maturity investments are recorded at amortized cost using the effective interest rate method less any impairment, with revenue recognized on an effective yield basis.
( Iv ) TRAde ReceIvABles
Trade receivables and other receivables that have fixed or determinable payments that are not quoted on an active market are classified as loans and receivables. loans and receivables are measured at amortized cost using the effective interest rate method, less any impairment.
( v ) ImpAIRmeNT Of fINANcIAl AsseTs
financial assets are assessed for indicators of impairment at each balance sheet date. financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.
The carrying amount of the financial asset is reduced by the impairment loss directly for all finan- cial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. subsequent recoveries of amounts previously written off are credited against the allowance account. changes in the carrying amount of the allowance account are recognized in profit or loss.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.
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( vI ) cAsh ANd cAsh eqUIvAleNTs
cash and cash equivalents comprise cash on hand and deposits with banks with a maturity of up to three months at inception.
( vII ) eqUITy INsTRUmeNTs
equity instruments, including share capital, issued by the company are recorded at the proceeds received, net of direct issue costs.
( vIII ) fINANcIAl lIABIlITIes
financial liabilities are classified as either financial liabilities “at fvTpl” or “other financial liabilities”.
( IX ) fINANcIAl lIABIlITIes AT fvTpl
financial liabilities are classified as at fvTpl where the liability is either
// held for trading or
// it is designated as at fvTpl.
financial liabilities at fvTpl are stated at fair value, with any resultant gain or loss recognized in profit or loss. The fair value is the estimated amount that a bank would receive or pay to termin ate the derivative contracts at the reporting date, taking into account current exchange rates, volatility and the credit-worthiness of the counterparties (market-to-market).
( X ) OTheR fINANcIAl lIABIlITIes
Other financial liabilities, including borrowings, are initially measured at fair value, net of trans- action costs. Other financial liabilities are subsequently measured at amortized cost using the effective interest rate method, with interest expense recognized on an effective yield basis.
( XI ) deRIvATIve fINANcIAl INsTRUmeNTs ANd hedGe AccOUNTING
The company’s activities expose it primarily to the financial risks of changes in foreign exchange
currency rates (see note 28). The company uses foreign exchange forward contracts to hedge
these exposures. The company does not use derivative financial instruments for speculative pur- poses. The use of financial derivatives is governed by policies approved by the executive Board, which provide written principles on the use of financial derivatives.
changes in the fair value of derivative financial instruments that are designated as effective hedges of future cash flows are recognized directly in equity and the ineffective portion is recog- nized immediately in the income statement.
changes in fair value of derivative financial instruments that do not qualify for hedge accounting are recognized in the income statement as they arise.
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hedge accounting is discontinued when the derivative financial instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the derivative financial instrument recognized in equity is retained in equity until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognized in equity is transferred to net profit or loss for the period.