Interim Report 2012 - TodayIR.com

Notes to Financial Statements30 June 20122.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)Financial liabilities (Continued)Subsequent measurementThe subsequent measurement of financial liabilities depends on their classification as follows:Loans and borrowingsAfter initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost, using the effectiveinterest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses arerecognised in the income statement when the liabilities are derecognised as well as through the effective interest rate amortisationprocess.Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral partof the effective interest rate. The effective interest rate amortisation is included in finance costs in the income statement.Derecognition of financial liabilitiesA financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires.When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of anexisting liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and arecognition of a new liability, and the difference between the respective carrying amounts is recognised in the income statement.Offsetting of financial instrumentsFinancial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if, and only if,there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or torealise the assets and settle the liabilities simultaneously.Fair value of financial instrumentsThe fair value of financial instruments that are traded in active markets is determined by reference to quoted market prices ordealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs.For financial instruments where there is no active market, the fair value is determined using appropriate valuation techniques. Suchtechniques include using recent arm’s length market transactions; reference to the current market value of another instrument whichis substantially the same; a discounted cash flow analysis; and other pricing models.InventoriesInventories comprise ingredients, consumables and food and beverages and are stated at the lower of cost and net realisable value.Cost is determined on a weighted average basis. Net realisable value is based on estimated selling prices less any estimated costs tobe incurred to completion and disposal.INTERIM REPORT 2012 35