Table of Contents Table of Contents
Previous Page  89 / 112 Next Page
Show Menu
Previous Page 89 / 112 Next Page
Page Background




Notes to the

financial statements

for the year ended 30 September 2015


4. Summary of significant accounting

policies (continued)

An assessment for impairments is undertaken at least

at the end of each reporting period whether or not

there is objective evidence that a financial asset or a

group of financial assets is impaired. Impairment loss

on loans and receivables is recognised when there is

objective evidence that the Company will not be able

to collect all the amounts due to it in accordance with

the original terms of the receivables. The amount of

the impairment loss is determined as the difference

between the asset’s carrying amount and the present

value of estimated future cash flows.

b. Financial liabilities

The Company’s financial liabilities include trade and

other payables and borrowings. Financial liabilities are

recognised when the Company becomes a party to

the contractual provisions of the instrument.

Financial liabilities are initially recognised at fair value,

net of transaction costs incurred and subsequently

measured at amortised cost using the effective interest

rate method. Financial liabilities are derecognised when

the obligation specified in the contract is discharged or

cancelled, or expire.

Convertible notes

Convertible notes which do not contain an equity

component are accounted for as follows:

At initial recognition the derivative component of the

convertible notes is measured at fair value and presented

as part of derivative financial instruments. Any excess

of proceeds over the amount initially recognised as

the derivative component is recognised as the liability

component. Transaction costs that relate to the issue

of the convertible note are allocated to the liability and

derivative components in proportion to the allocation of

proceeds. The portion of the transaction costs relating to

the liability component is recognised initially as part of the

liability. The portion relating to the derivative component

is recognised immediately in profit or loss.

At the end of each reporting period the derivative

component is re-measured. The liability component

is subsequently carried at amortised cost. The

interest expense recognised in profit or loss on the

liability component is calculated using the effective

interest method.

If the note is converted, the carrying amounts of the

derivative and liability components are transferred to

share capital and share premium as consideration for the

shares issued. If the note is redeemed, any difference

between the amount paid and the carrying amounts of

both components is recognised in profit or loss.


A provision is recognised when a present obligation (legal

or constructive) has arisen as a result of a past event and

it is probable that a future outflow of resources will be

required to settle the obligation, provided that a reliable

estimate can be made of the amount of the obligation.

When the effect of discounting is material, the amount

recognised for a provision is the present value at the

end of the reporting period of the future expenditures

expected to be required to settle the obligation. The

increase in the discounted present value amount arising

from the passage of time is included in profit or loss.

Provision for product warranties granted by the Company

on certain products is recognised based on sales volume

and past experience of the level of repairs and returns,

discounted to its present value as appropriate.

Deferred tax

Deferred tax is provided using the liability method, on

temporary differences at the end of the reporting period

arising between the tax bases of assets and liabilities and

their carrying amounts for financial reporting purposes.

Tax rates enacted or substantively enacted by the

end of the reporting period are used to determine the

deferred tax.

Deferred tax liabilities are provided in full while deferred

tax assets are recognised to the extent that it is probable

that future taxable profit will be available against which

the temporary differences can be utilised.

Revenue recognition

Revenue is recognised when it is probable that the

economic benefits will flow to the Company and the

revenue can be reliably measured. Revenue is measured

at the fair value of the consideration received or

receivable, net of returns and discounts.

Interest income is recognised using the effective interest

rate method.

Cash and cash equivalents

For the purpose of the statement of cash flows, cash

and cash equivalents include cash on hand, deposits

held at call with banks, and other short term highly liquid

investments with original maturity of three months or less

when acquired, less bank overdrafts.

Borrowing costs

Borrowing costs are expensed in profit or loss in the year

in which they are incurred.