Basic financial liabilitiesBasic financial liabilities, including creditors, bank loans, loans from fellow group companies andpreference shares that are classified as debt, are initially recognised at transaction price unless thearrangement constitutes a financing transaction, where the debt instrument is measured at the presentvalue of the future paymen ts discounted at a market rate of interest. Financial liabilities classified aspayable within one year are not amortised.Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary courseof business from suppliers. A m ounts payable are classified as current liabilities if payment is due withinone year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initiallyat transaction price and subsequently measured at amortised cost using the effective interest method.1.7 Equity instrumentsEquity instruments issued by the company are recorded at the proceeds received, net of direct issue costs.Dividends payable on equity instruments are recognised as liabilities once they are no longer at thediscretion of the company.1.8 TaxationThe tax expense represents the sum of the tax currently payable and deferred tax.Current taxThe tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit asreported in the profit and loss account because it excludes items of income or expense that are taxable ordeductible in other years and it further excludes items that are never taxable or deductible. The company’sliability for current tax is calculated using tax rates that have been enacted or substantively enacted by thereporting end date.Deferred taxDeferred tax liabilities are generally recognised for all timing differences and deferred tax assets arerecognised to the extent that it is probable that they will be recovered against the reversal of deferred taxliabilities or other future taxable profits. Such assets and liabilities are not recognised if the timingdifference arises from goodwill or from the initial recognition of other assets and liabilities in a transactionthat affects neither the tax profit nor the accounting profit.The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to theextent that it is no longer probable that sufficient taxable profits will be available to allow all or part of theasset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the periodwhen the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and lossaccount, except when it relates to items charged or credited directly to equity, in which case the deferredtax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legallyenforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relateto taxes levied by the same tax authority.Employee benefitsThe costs of short-term employee benefits are recognised as a liability and an expense, unless those costsare required to be recognised as part of the cost of stock or fixed assets.The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.Termination benefits are recognised immediately as an expense when the company is demonstrablycommitted to terminate the employment of an employee or to provide termination benefits.1.10 Retirement benefitsPayments to defined contribution retirement benefit schemes are charged as an expense as they fall due.