-- IFRS 9 issued in November 2009 introduces new requirements
for the classification and measurement of financial assets. IFRS 9
amended in October 2010 includes the requirements for the
classification and measurement of financial liabilities and for
derecognition.
IFRS requires all recognised financial assets that are within
the scope of IAS 39 'Financial Instruments: Recognition and
Measurement' to be subsequently measured at amortised cost or fair
value. Specifically, debt investments that are held within a
business model whose objective is to collect the contractual cash
flows, and that have contractual cash flows that are solely
payments of principal and interest on the principal outstanding are
generally measured at amortised cost at the end of subsequent
accounting periods. All other debt investments and equity
investments are measured at their fair values at the end of
subsequent accounting periods.
The most significant effect of IFRS 9 regarding the
classification and measurement of financial liabilities relates to
the accounting for changes in the fair value of a financial
liability (designated as at fair value through profit or loss and
available for sale) attributable to changes in the credit risk of
that liability. Specifically, under IFRS 9, for financial
liabilities that are designated as at fair value through profit or
loss, the amount of change in the fair value of the financial
liability that is attributable to changes in the credit risk of
that liability is presented in other comprehensive income, unless
the recognition of the effects of the changes in the liability's
credit risk in other comprehensive income would create or enlarge
an accounting mismatch in profit or loss. Changes in fair value
attributable to a financial liability's credit risk are not
subsequently reclassified to profit or loss. Previously, under IAS
39, the entire amount of the change in the fair value of the
financial liability designated as at fair value through profit or
loss was presented in profit or loss.
The directors anticipate that the adoption of these standards
and the interpretations in future periods will have no material
impact on the financial statements of the Group.
There are no IFRS or IFRS IC interpretations that are effective
for the first time in this financial year that have had a material
impact on the Group. There are no other IFRS or IFRS IC
interpretations that are not yet effective that would be expected
to have a material impact on the Group.
2.1 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of the Company are
measured using the currency of the primary economic environment in
which the entity operates (the functional currency). The financial
statements are presented in Pounds Sterling (GBP), which is the
Company's functional and presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income
statement.
Foreign currency transactions are translated into the functional
currency using exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income
statement.
2.2 Receivables
Receivables are recognised and stated at fair value less any
allowances for doubtful debts and provisions for impairment. Known
bad debts are written off and doubtful debts are provided for based
on estimates of possible losses which may arise from non-collection
of certain receivables accounts.
2.3 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at
call with banks, other short-term highly liquid investments with
original maturities of three months or less, and bank overdrafts.
Bank overdrafts are shown within borrowings in current liabilities
on the balance sheet.
2.4 Investments available for sale
Investments are recognised and derecognised on a trade date
where a purchase or sale of an investment is under a contract whose
terms require delivery of the investment within the timeframe
established by the market concerned, and are initially measured at
cost, including transaction costs.
Investments classified as available for sale are measured at
subsequent reporting dates at fair value. Fair value is defined as
the price at which an orderly transaction would take place between
market participants at the reporting date and is therefore an
estimate and as such requires the use of judgement. Where possible
fair value is based upon observable market prices, such as listed
equity markets or reported merger and acquisition transactions.
Alternative bases of valuation may include contracted proceeds
or best estimate thereof, implied valuation from further investment
and long-term cash flows discounted at a rate which is tested
against market data. Gains and losses arising from changes in fair
value are recognised directly in other comprehensive income, until
the security is disposed of or is determined to be impaired, at
which time the cumulative gain or loss previously recognised in
other comprehensive income is included in the net profit or loss
for the period.
Impairment losses recognised in the income statement for equity
investments classified as available-for-sale are not subsequently
reversed through the income statement.
2.5 Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
2.6 Share premium
Share premium represents the excess of the amount subscribed for
share capital over the nominal value of these shares net of share
issue expenses.
2.7 Trade payables
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method.
2.8 Borrowings
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently stated at
amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the
income statement over the period of the borrowings using the
effective interest rate method.
Borrowings are classified as current liabilities unless the
Company has an unconditional right to defer settlement of the
liability for at least 12 months after the balance sheet date.
2.9 Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in the income statement except to
the extent that it relates to items recognised directly in equity,
in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at
the balance sheet date together with any adjustment to tax payable
in respect of previous years.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: the initial recognition
of assets or liabilities that affect neither accounting nor taxable
profit other than in a business combination, and differences
relating to investments in subsidiaries to the extent that they
will probably not reverse in the foreseeable future. The amount of
deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at
the balance sheet date.
2.10 Revenue recognition
Revenue comprises the fair value of the consideration received
or receivable for services in the ordinary course of the Group's
activities. Revenue is shown net of value-added tax, returns,
rebates and discounts and after eliminating sales within the
Group.
Coal transportation: revenue is recognised as a commission on
the amounts of coals transferred per contractual agreement. Fuel
costs of vehicles and driver costs are recognised as a cost of
services sold on date of completion. Revenue is the consideration
received or receivable from customers in the normal course of
business.
2.11 Investments
Investments are stated at cost less provision for any impairment
in value.
2.12 Property and equipment
All items of property and equipment are initially recorded at
cost. Subsequent costs are included in the asset's carrying amount
or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of any replaced part is derecognised.
All other repairs and maintenance are charged to the statement of
comprehensive income during the financial year in which they are
incurred.
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