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Notes to the Consolidated Financial Statements

31st March 2016

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.9 Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually
for impairment. Assets that are subject to amortisation are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to
sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (cash-generating units). Non-financial
assets other than goodwill that suffered an impairment are reviewed for possible reversal of the
impairment at each reporting date.

2.10 Financial assets

2.10.1 Classification

The Group classifies its financial assets as loans and receivables. The classification depends
on the purpose for which the financial assets were acquired. Management determines the
classification of its financial assets at initial recognition.

Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. They are included in current assets, except for
those with maturities greater than 12 months after the end of the reporting period. These
are classified as non-current assets. The Group’s loans and receivables comprise “trade
receivables, prepayments, deposits and other receivables” and “cash and cash equivalents”
in the consolidated balance sheet (Notes 2.13 and 2.14).

2.10.2 Recognition and measurement

Regular way purchases and sales of financial assets are recognised on the trade-date – the
date on which the Group commits to purchase or sell the asset. Investments are initially
recognised at fair value plus transaction costs for all financial assets not carried at fair value
through profit or loss. Financial assets are derecognised when the rights to receive cash flows
from the investments have expired or have been transferred and the Group has transferred
substantially all risks and rewards of ownership. Loans and receivables are subsequently
carried at amortised cost using the effective interest method.

The Group assesses at the end of each reporting period whether there is objective evidence
that a financial asset or a group of financial assets is impaired. Impairment testing of loans
and receivables is described in Note 2.11.

ALCO HOLDINGS LIMITED ANNUAL REPORT 2016 43