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AFRICAN DAWN ANNUAL REPORT 14

Accounting Policies continued 1.8 Financial instruments continued Other financial liabilities Included within this class of financial liabilities are trade and other payables, provisions and group loans payable that will be settled in cash and cash equivalents. Trade and other payables and group loans payable are recognised initially at fair value and are subsequently stated at amortised cost using the effective interest rate method. Compound financial liabilities If the terms of convertible instruments that give rise to a non-derivative instrument containing both the liability and equity component, they are treated as compounded financial instruments. The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially as the difference between the fair value of the compound financial instrument in its totality and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts. Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition, only derecognised on conversion or settlement. De-recognition of financial assets and liabilities Financial assets are derecognised when the contractual rights to the cash flow from the financial asset expire, or when the financial asset and substantial risk and rewards are transferred. The financial liabilities are derecognised when it is extinguished, discharged, cancelled or expires. Impairment of financial assets All financial assets, except for those at fair value through profit and loss, are subject to review for impairment at least at each reporting date to identify whether there is any objective evidence that the financial assets or group of financial assets are impaired. The different criteria to determine the impairment is for each asset class as follows; (for details see note 34). Loans and receivables: Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that the specific counterparty will default. Receivables that are not considered to be individually impaired are reviewed for impairment. Held-to-maturity investments: If there is objective evidence that the investment is impaired, determined by reference to external credit ratings, the financial asset is measured at the present value of estimated future cash flows. Any changes to the carrying amount of the investment, including impairment losses are recognized in profit and loss. Available-for-sale financial assets: If the fair value cannot be estimated reliably the impairment charges are recognised in profit or loss. All other available-for-sale assets are measured at fair value. Gains and losses from movement in fair value is recognised in other comprehensive income and reported as being available for sale reserves in equity. Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. Deferred loan income reduces the outstanding loans and receivables balance on the basis that the revenue will be recognised over the terms of the loans. 1.9 Cash and cash equivalents Cash and cash equivalents are carried in the statement of financial position at cost. Cash and cash equivalents comprise cash on hand, deposits held on call with banks, other short term, highly liquid investments with original maturities of three months or less and bank overdrafts. AFRICAN DAWN 3 9 ANNUAL REPORT 2014


AFRICAN DAWN ANNUAL REPORT 14
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