UNBOUNCE - EXAMPLE PAGE-REPORT-ENTERPRISE DOCUMENT-KINGSPAN - Flipbook - Page 140
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021 (continued)
1
Statement of Accounting Policies (continued)
Financial Assets
On initial recognition, a financial asset is
classified as measured at amortised cost
and subsequently measured using the
effective interest rate (EIR) method and
subject to impairment. Financial assets
may also be initially measured at fair
value with any movement being reflected
through other comprehensive income or the
Consolidated Income Statement.
On initial recognition of an equity
investment that is not held for trading,
the Group may irrevocably elect to present
subsequent changes in the investment’s
fair value in other comprehensive income.
This election is made on an investment-byinvestment basis.
The Group applies the simplified approach
for expected credit losses (ECL) under IFRS
9 Financial Instruments, which requires
expected lifetime losses to be recognised
from initial recognition of receivables.
Under IFRS 9 Financial Instruments,
the Group uses an allowance matrix to
measure Expected Credit Loss (ECL)
of trade receivables from customers.
Loss rates are calculated using a “roll
rate” method based on the probability
of a receivable progressing through
successive chains of non-payment to
write-off. The rates are calculated at a
business unit level which reflects the risks
associated with geographic region, age,
mix of customer relationship and type of
product purchased.
Financial Liabilities
Financial liabilities held for trading are
measured at fair value through the profit
and loss, and all other financial liabilities
are measured at amortised cost unless the
fair value option is applied.
Finance Income
Finance income comprises interest income
on funds invested and any gains on
hedging instruments that are recognised
in the Consolidated Income Statement.
Interest income is recognised as it accrues
using the effective interest rate method.
Finance Expense
Finance expense comprises negative
interest charged on cash balances held
in certain currencies, interest payable on
borrowings calculated using the effective
interest rate method, fair value gains and
losses on hedging instruments that are
recognised in the Consolidated Income
Statement, the net finance cost of the
Group’s defined benefit pension scheme,
136 - 137
lease interest and the discount component
of the deferred consideration which is
unwound as an interest charge in the
Consolidated Income Statement over the
life of the obligation.
Borrowing costs
Borrowing costs directly attributable to
qualifying assets, as defined in IAS 23
Borrowing costs, are fully capitalised
during the period of time that is necessary
to complete and prepare the asset for its
intended use. Other borrowing costs are
expensed to the Consolidated Income
Statement in the period in which they
are incurred.
Share-Based Payment Transactions
The Group grants equity settled share
based payments to employees through the
Performance Share Plan and the Deferred
Bonus Plan.
The fair value of these equity settled
transactions is determined at grant date
and is recognised as an employee expense
in the Consolidated Income Statement,
with the corresponding increase in equity,
on a straight line basis over the vesting
period. The fair value at the grant date is
determined using a combination of the
Monte Carlo simulation technique and the
Black Scholes model, excluding the impact
of any non-market conditions. Non-market
vesting conditions are included in the
assumptions about the number of options
that are expected to vest. At each reporting
date, the Group revises its estimates of the
number of options that are likely to vest
as a result of non-market conditions. Any
adjustment from this revision is recognised
in the Consolidated Income Statement with
a corresponding adjustment to equity.
Where the share based payments give
rise to the issue of new share capital, the
proceeds received by the Company are
credited to share capital (nominal value)
and share premium (where applicable)
when the share entitlements are exercised.
Where the share-based payments give
rise to the re-issue of shares from treasury
shares, the proceeds of issue are credited
to share premium.
The Group does not operate any cashsettled share-based payment schemes or
share-based payment transactions with
cash alternatives as defined in IFRS 2.
Treasury Shares
Where the Company purchases its own
equity share capital, the consideration
paid is deducted from total shareholders’
equity and classified as treasury shares
until such shares are cancelled or reissued.
Where such shares are subsequently sold
or reissued, any consideration received
is included in share premium account.
No gains or losses are recognised on the
purchase, sale, cancellation or issue of
treasury shares.
Non-controlling interest
Non-controlling interests represent the
portion of the equity of a subsidiary not
attributable either directly or indirectly to
the parent company and are presented
separately in the Consolidated Income
Statement and within equity in the
Consolidated Statement of Financial
Position, distinguished from shareholders’
equity attributable to owners of the
parent company.
Accounting Estimates
and Judgements
In the process of applying the Group’s
accounting policies, as set out on pages
129 to 137, management are required to
make estimates and judgements that
could materially affect the Group’s reported
results or net asset position.
The preparation of the Group’s consolidated
financial statements requires management
to make judgements, estimates and
assumptions that affect the reported
amounts of revenues, expenses, assets
and liabilities, and the accompanying
disclosures, and the disclosure of
contingent liabilities. Uncertainty about
these assumptions and estimates could
result in outcomes that require a material
adjustment to the carrying amount
of assets or liabilities in future periods.
The Group has considered the impact
of climate change on the consolidated
financial statements, including the carrying
value of assets, the useful economic life of
assets, and provisions.
