2017 WEL Networks
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Annual Report
40
transferred substantially all risks and rewards of ownership.
Financial assets and financial assets at fair value through
profit or loss are subsequently carried at fair value. Loans
and receivables are subsequently carried at amortised cost
using the effective interest method.
Gains or losses arising from changes in the fair value of
the ‘financial assets at fair value are presented through
the profit and loss component of the statement of
comprehensive income statement within expenses in
the period in which they arise.
Dividend income from financial assets at fair value is
recognised in the profit and loss component of the
statement of comprehensive income as part of other
income when the Group’s right to receive payments
is established.
Changes in the fair value of monetary and non-monetary
securities classified as available for sale are recognised
in other comprehensive income.
Impairment of financial assets
(i)
Assets carried at amortised cost
The Group assesses at the end of each reporting period
whether there is objective evidence that a financial asset or
group of financial assets is impaired. A financial asset or a
group of financial assets is impaired and impairment losses
are incurred only if there is objective evidence of impairment
as a result of one or more events that occurred after the initial
recognition of the asset (a ‘loss event’) and that loss event
(or events) has an impact on the estimated future cash flows
of the financial asset or group of financial assets that can be
reliably estimated.
Evidence of impairment may include indications that the
debtors or a group of debtors is experiencing significant
financial difficulty, default or delinquency in interest or principal
payments, the probability that they will enter bankruptcy or
other financial reorganisation, and where observable data
indicate that there is a measurable decrease in the estimated
future cash flows, such as changes in arrears or economic
conditions that correlate with defaults.
For the loans and receivables category, the amount of the
loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future
cash flows (excluding future credit losses that have not
been incurred) discounted at the financial asset’s original
effective interest rate. The carrying amount of the asset is
reduced and the amount of the loss is recognised in the
consolidated statement of comprehensive income.
(k)
Financial liabilities
Other financial liabilities at amortised cost
Other financial liabilities at amortised cost are non-
derivative financial liabilities with fixed or determinable
payments that are not quoted in an active market. They
are included in current liabilities, except for maturities
greater than 12 months after the reporting date which are
classified as non-current liabilities. Other financial liabilities
are classified as ‘trade and other payables’ and provisions
in the balance sheet.
(l)
Fair value estimation
The fair value of financial assets and financial liabilities
must be estimated for recognition and measurement or
for disclosure purposes.
The fair value of financial instruments that are not traded in
an active market (for example, over-the-counter derivatives)
is determined using valuation techniques. The Group uses a
variety of methods and makes assumptions that are based
on market conditions existing at each balance date. Quoted
market prices or dealer quotes for similar instruments are
used for long-term debt instruments held. Other techniques,
such as estimated discounted cash flows, are used to
determine fair value for the remaining financial instruments.
The fair value of interest rate swaps is calculated as the
present value of the estimated future cash flows. The fair
value of forward exchange contracts is determined using
forward exchange market rates at the balance date.
The nominal value less estimated credit adjustments
of trade receivables and payables are assumed to
WEL NETWORKS LIMITED
Notes to the financial statements
For the year-ended 31 March 2017
(continued)
