Trade debtorsTrade debtors are amounts due from customers for merchandise sold or services performed in the ordinarycourse of business.Trade debtors are recognised initially at the transaction price. All trade debtors are repayable within one year andhence are included at the undiscounted cost of cash expected to be received. A provision for the impairment oftrade debtors is established when there is objective evidence that the company will not be able to collect allamounts due according to the original terms of the debtors.Trade creditorsTrade creditors are obligations to pay for goods or services that have been acquired in the ordinary course ofbusiness from suppliers. Accounts payable are classified as current liabilities if the company does not have anunconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve monthsafter the reporting date. If there is an unconditional right to defer settlement for at least twelve months after thereporting date, they are presented as non-current liabilities.Trade creditors are recognised initially at the transaction price and all are repayable within one year and henceare included at the undiscounted amount of cash expected to be paid.BorrowingsInterest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearingborrowings are subsequently carried at amortised cost, with the difference between the proceeds, net oftransaction costs, and the amount due on redemption being recognised as a charge to the Profit and LossAccount over the period of the relevant borrowing.Interest expense is recognised on the basis of the effective interest method and is included in interest payableand similar charges.Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlementof the liability for at least twelve months after the reporting date.LeasesLeases in which substantially all the risks and rewards of ownership are retained by the lessor are classified asoperating leases. Payments made under operating leases are charged to profit or loss on a straight-line basisover the period of the lease.Share capitalOrdinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or otherresources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferredand the time value of money is material, the initial measurement is on a present value basis.DividendsDividend distribution to the company’s shareholders is recognised as a liability in the financial statements in thereporting period in which the dividends are declared.Financial instrumentsClassificationFinancial instruments are classified and accounted for according to the substance of the contractualarrangement, as financial assets, financial liabilities or equity instruments. An equity instrument is any contractthat evidences a residual interest in the assets of the company after deducting all of its liabilities. Where sharesare issued, any component that creates a financial liability of the company is presented as a liability on thebalance sheet. The corresponding dividends relating to the liability component are charged as interest expensesin the profit and loss account.Recognition and measurementAll financial assets and liabilities are initially measured at transaction price (including transaction costs), exceptfor those financial assets classified as at fair value through profit or loss, which are initially measured at fair value(which is normally the transaction price excluding transaction costs), unless the arrangement constitutes afinancing transaction. If an arrangement constitutes a financing transaction, the financial asset or financial liabilityis measured at the present value of the future payments discounted at a market rate of interest for a similar debtinstrument.ImpairmentAssets, other than those measured at fair value, are assessed for indicators of impairment at each balance sheetdate. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss as describedbelow.A non financial asset is impaired where there is objective evidence that, as a result of one or more events thatoccurred after initial recognition, the estimated recoverable value of the asset has been reduced. The recoverableamount of an asset is the higher of its fair value less costs to sell and its value in use.The recoverable amount of goodwill is derived from measurement of the present value of the future cash flows ofthe cash-generating units ('CGUs') of which the goodwill is a part. Any impairment loss in respect of a CGU isallocated first to the goodwill attached to that CGU, and then to other assets within that CGU on a pro-rata basis.Where indicators exist for a decrease in impairment loss, the prior impairment loss is tested to determinereversal. An impairment loss is reversed on an individual impaired asset to the extent that the revisedrecoverable value does not lead to a revised carrying amount higher than the carrying value had no impairmentbeen recognised. Where a reversal of impairment occurs in respect of a CGU, the reversal is applied first to theassets (other than goodwill) of the CGU on a pro-rata basis and then to any goodwill allocated to that CGU.For financial assets carried at amortised cost, the amount of an impairment is the difference between the asset’scarrying amount and the present value of estimated future cash flows, discounted at the financial asset’s originaleffective interest rate.For financial assets carried at cost less impairment, the impairment loss is the difference between the asset’scarrying amount and the best estimate of the amount that would be received for the asset if it were to be sold atthe reporting date.Where indicators exist for a decrease in impairment loss, and the decrease can be related objectively to an eventoccurring after the impairment was recognised, the prior impairment loss is tested to determine reversal. Animpairment loss is reversed on an individual impaired financial asset to the extent that the revised recoverablevalue does not lead to a revised carrying amount higher than the carrying value had no impairment beenrecognised.Defined contribution pension obligationA defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and thecompany has no legal or constructive obligation to pay further contributions even if the fund does not holdsufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.Contributions to defined contribution plans are recognised as employee benefit expense when they are due. Ifcontribution payments exceed the contribution due for service, the excess is recognised as a prepayment.