enl commercial limited annual report 2011 - Investing In Africa

Notes to the Financial Statements
Year ended June 30, 2011
2 SIGNIFICANT ACCOUNTING POLICIES (continued)
(o)
Financial instruments (continued)
(ii) Trade and loan receivables
Trade and loan receivables are recognised initially at fair value and subsequently measured at amortised
cost using the effective interest method less provision for impairment. A provision for impairment of trade
receivables 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 receivables. The amount of provision is recognised on
the statement of comprehensive income.
(iii) Trade payables
Trade payables are stated at fair value and subsequently measured at amortised cost using the effective
interest method.
(iv) Equity instruments
Equity instruments are recorded net of direct issue costs.
(v) Borrowings
Borrowings are recognised net of direct issue costs.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer
settlement of the liability for at least twelve months after the end of the reporting period.
(vi) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new share
are shown in equity as deduction from proceeds.
(vii) Cash and cash equivalents
Cash and cash equivalents include cash in hand and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the statement of financial position.
(p)
Segment reporting
Segment information presented relates to operating segments that engage in business activities for
which revenues are earned and expenses incurred.
(q)
Deferred income
Grant received from Government in respect of capital expenditure are treated as deferred revenue. These
are credited to the statements of comprehensive income by instalments over the expected lives of the
related assets.
(r)
Provisions
Provisions are recognised when the group has a present legal or constructive obligation as a result of
past events, which will probably result in an outflow of economic benefits that can be reliably estimated.
3 FINANCIAL RISK MANAGEMENT
3.1 Financial risk factors
The group’s activities expose it to a variety of financial risks, including:
• Market risk (including currency risk, price risk and cash flow and fair value interest risk);
• Credit risk; and
• Liquidity risk
The group’s overall risk management programme focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the group’s financial performance.
A description of the significant risk factors is given below together with the risk management policies
applicable.
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ENL Commercial Limited
Annual Report 2011