costs. Subsequent to initial recognition measured at
amortised cost using the effective interest method.
Receivables comprise cash and cash equivalents and
trade and other receivables.
Cash and cash equivalents in the balance sheet
includes cash on hand, deposits held at call with
financial institutions, other short term, highly liquid
investments with original maturities of three months
or less that are readily convertible to known amounts
of cash and which are subject to an insignificant risk of
changes in value.
Non-derivative financial liabilities
Financial liabilities are recognised initially on the
trade date and derecognised when contractual
obligations are discharged, cancelled or expired. Such
liabilities are recognised at fair value less any directly
attributable transaction costs, subsequently measured
at amortised cost using the effective interest method.
Other financial liabilities comprise loan facilities (see
note 1 (m)), bonds, bank overdrafts and trade and
other payables.
Derivative financial instruments
The Group holds derivative financial instruments
to hedge its foreign currency and interest rate risk
exposures. On initial designation of the derivative
as the hedging instrument, the Group formally
documents the relationship between the hedging
instrument and the hedged item, including the risk
management objectives and strategy in undertaking
the hedge transaction and the hedged risk, together
with the methods that will be used to assess the
effectiveness of the hedging relationship.
The Group makes an assessment, both at the
inception of the hedge relationship as well as on an
ongoing basis, of whether the hedging instruments
are expected to be highly effective in offsetting the
changes in the fair value or cash flows of the respective
hedged items attributable to hedged risk and whether
the actual results of each hedge are within a range of
80 - 125 percent. For a cash flow hedge of a forecast
transaction, the transaction should be highly probable
to occur and should present an exposure to variations
in cash flows that ultimately could affect reported
profit or loss.
Derivatives are recognised initially at fair value; any
attributable transaction costs are recognised in profit
or loss as incurred. Subsequent to initial recognition,
derivatives are measured at fair value and changes are
recognised in comprehensive income and presented in
equity, unless ineffective in which case the ineffective
portion is recognised immediately in the profit or loss.
Amounts accumulated in equity are transferred to
the Consolidated Income Statement in the periods
when the hedged item affects profit or loss (for
instance when the delivery of the goods hedged
takes place). The gain or loss relating to the effective
portion of forward foreign exchange contracts
hedging the imported goods is recognised in the
Consolidated Income Statement within ‘infrastructure
maintenance’. However, when the forecast transaction
that is hedged results in the recognition of a non
financial asset (for example, inventory or fixed assets)
the gains and losses previously deferred in equity
are transferred from equity and included in the initial
measurement of the cost of the asset. The deferred
amounts are ultimately recognised in profit or loss
as infrastructure maintenance in the case of goods
relating to maintenance, or as depreciation in the case
of fixed assets.
When a hedging instrument expires or is sold or
terminated, or when a hedge no longer meets the
criteria for hedge accounting, any cumulative gain or
loss existing in equity at that time remains in equity
and is recognised when the forecast transaction is
ultimately recognised in the Consolidated Income
Statement. When a forecast transaction is no longer
expected to occur, the cumulative gain or loss that was
reported in equity is immediately transferred to the
Consolidated Income Statement.
(v) Goods and
services tax (GST)
Revenues, expenses and assets are recognised net of
the amount of associated GST, unless the GST incurred
is not recoverable from the taxation authority. In this
case it is recognised as part of the cost of acquisition of
the asset or as part of the expense.
Receivables and payables are stated inclusive of the
amount of GST receivable or payable. The net amount
of GST recoverable from, or payable to, the taxation
authority is included with other receivables or payables
in the Consolidated Balance Sheet.
Cash flows are presented on a gross basis. The GST
components of cash flows arising from investing or
financing activities which are recoverable from, or
NOTE 01
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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