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BUSINESS MODEL
AND STRATEGIC
OBJECTIVES
LEADERSHIP
GOVERNANCE
OPERATING
PERFORMANCE
SHAREHOLDERS’
INFORMATION AND
ADMINISTRATION
FINANCIAL
PERFORMANCE
BLUE LABEL INTEGRATED ANNUAL REPORT 2014
127
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
CONTINUED
For the year ended 31 May 2014
1.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Impairment of financial assets (continued)
(a) Loans and receivables
The Group assesses at each reporting date whether there is objective evidence that a financial asset or
a group of financial assets is impaired. A provision for impairment is established when there is objective
evidence that the Group will not be able to collect all amounts due according to the original terms of
the receivables. Objective evidence that receivables are impaired includes observable data that comes
to the attention of the Group about the following events:
•
•
Significant financial difficulty of the debtor;
•
•
A breach of contract, such as default or delinquency in payments; and
•
•
It becoming probable that the borrower will enter bankruptcy or other financial reorganisation.
The amount of the provision is the difference between the carrying amount and the recoverable amount of
the assets being the present value of expected cash flows discounted at the original effective interest rate.
The amount of the provision is recognised as a charge in the statement of comprehensive income.
When a receivable is uncollectible, it is written off against the provision. Subsequent recoveries of amounts
previously written off are credited to the statement of comprehensive income.
Financial liabilities and equity instruments
Financial liability and equity instruments issued by the Group are classified according to the substance of the
contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An
equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting
all of its liabilities. Refer to accounting policies on borrowings and trade and other payables for financial
liabilities (which exclude employee-related liabilities and VAT), and share capital for equity instruments issued
by the Group.
Fair value estimation
The best evidence of fair value on initial recognition is the transaction price, unless the fair value is evidenced
by comparison with other observable current market transactions in the same instrument or based on
discounted cash flow models and option pricing valuation techniques whose variables include only data from
observable markets. Subsequent to initial recognition, the fair values of quoted financial assets are based on
current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group
establishes fair value by using valuation techniques.
These include the use of recent arm’s-length transactions, reference to other instruments that are
substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer’s
specific circumstances.
Property, plant and equipment
Property, plant and equipment is initially recorded at historical cost, being the purchase cost plus any cost to
prepare the assets for their intended use. Historical cost includes expenditure that is directly attributable to
the acquisition of the item. Subsequent costs are included in the asset’s carrying amount or recognised as a
separate asset, as appropriate, only when it is probable that future economic benefits associated with the
item will flow to the Group and the cost of the item can be measured reliably. All other repairs and
maintenance are charged to the statement of comprehensive income during the financial period in which
they are incurred.