47153 AG Barr Annual Report 2025 AW4 SQ WEB - Flipbook - Page 153
Strategic Report
Corporate Governance
Accounts
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.
Assets held for sale
Non-current assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use and a sale is
considered highly probable. Assets held for sale are measured at the lower of their carrying amount and fair value less costs to sell where they meet the ‘held for sale’
criteria. Depreciation on these assets ceases and they are presented separately in the balance sheet within current assets.
An impairment loss is recognised for an initial or subsequent write-down of the assets to fair value less costs to sell. A gain is recognised for any subsequent increases
in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognised.
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 13.
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 13.
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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