Annual report and accounts 2023 - Flipbook - Page 152
A.G. BARR p.l.c. Annual Report and Accounts 2023
Notes to the Accounts continued
1.
Accounting Policies continued
Recognition and derecognition of financial instruments
Purchases or sales of financial assets that require delivery of assets within a timeframe established by regulation or convention in the market-place (regular way trades) are
recognised at the trade date, i.e. the date that the Group commits to purchase or sell the asset. All other financial assets and financial liabilities are recognised at trade date.
Financial assets are derecognised when the rights to receive cash flows from the contractual assets have expired or have been transferred and the Group has transferred all
the risks and rewards of ownership.
Financial liabilities are derecognised when, and only when, the Group’s obligations are discharged, cancelled or have expired.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, on demand deposits with banks and other short-term, highly liquid investments with maturities of three months or less,
which are readily convertible into known amounts of cash and subject to insignificant risk of changes in value. For the purposes of the statement of cash flows, bank
overdrafts repayable on demand that form an integral part of the Group’s cash management are included as components of cash and cash equivalents.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated
at amortised cost using the effective interest method.
Put liability
A put liability is recognised where the Group is obliged to purchase the shares of a subsidiary from non-controlling shareholders. It is initially measured at the present value
of the redemption amount in the consolidated financial statements with any changes in the measurement recognised in the income statement. The liability is recognised
as a non-current liability if it is not expected to be exercised within 12 months.
Contingent consideration
Contingent consideration resulting from business combinations, is measured at fair value using the income approach. When the contingent consideration meets the
definition of a financial liability, it is subsequently remeasured to fair value at each reporting date. The determination of the fair value of contingent consideration is based
on cash flows and is classified as a non-current liability in the balance sheet.
Derivative financial instruments and hedging activities
The Group enters into derivative financial instruments to manage its exposure to foreign exchange rate risks using foreign exchange forward contracts. Further details of
derivative financial instruments are disclosed in Note 14.
Derivatives are recognised initially at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value. The gain or loss on
remeasurement is recognised in the income statement immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing
of the recognition in the income statement depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability. Derivatives are not
offset in the financial statements unless the Group has both legal right and intention to offset. The impact of hedging on the Group’s financial position is disclosed in Note 14.
A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be
realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.
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