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AFRICAN DAWN Annual Report 2016

Accounting Policies continued Collateral Generally no collateral is held in respect of recognised financial assets. In the event that collateral is held, it is not recognised by the group, as the group does not retain the risks and rewards of ownership, and is obliged to return such collateral to counterparties on settlement of the related obligations. Should a counterparty be unable to settle its obligations, the group takes possession of collateral or calls on other credit enhancements as full or part settlement of such amounts. These assets are recognised when the applicable recognition criteria under IFRS are met, and the group’s accounting policies are applied from the date of recognition. Refer below for properties in possession. Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. Classification as debt or equity Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement. Ordinary share capital and any financial instrument issued by the company is classified as equity when: • Payment of cash, in the form of a dividend or redemption, is at the discretion of the group; • The instrument does not provide for the exchange of financial instruments under conditions that are potentially unfavourable to the group • Settlement in the group’s own equity instruments is for a fixed number of equity instruments at a fixed price; and • The instrument represents a residual interest in the assets of the group after deducting all its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs. Equity instruments are recorded at the proceeds received, net of direct issue costs. Financial guarantee contracts Financial guarantee contracts are contracts that protect a creditor from a loss it may incur if a debtor fails to make payments when due in accordance with the terms of a debt instrument. These are accounted for as financial instruments and are initially recognised at fair value, which is usually equal to the premium received, if any. Financial guarantee contracts are subsequently measured at the higher of: • The amount determined in accordance with IAS 37 (refer note 1.14 on provisions); and • The initial fair value less cumulative amortisation in accordance with IAS 18. The group does not issue any financial guarantee contract for a premium. At each reporting date, it considers whether payment under the guarantee contract is probable (more likely than not) for a provision to be recognised under IAS 37. If a provision is recognised, and the provision amount is greater than the existing carrying amount (after amortisation of revenue under IAS 18), an adjustment is required to reflect the provision and recognise the difference in profit or loss. Transactions that affect equity Share capital and share premium and transaction costs Shares issued by the group are recorded at the value of the proceeds received less the external costs directly attributable to the issue of the shares. All transactions relating to the acquisition and sale or issue of shares in the company, together with their associated costs, are accounted for in equity. AFRICAN DAWN ANNUAL REPORT 2016 49


AFRICAN DAWN Annual Report 2016
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