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Notes to the Consolidated Financial Statements

31st March 2017

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 and
other receivables” and “cash and cash equivalents” in the consolidated balance sheet (Notes
2.14 and 2.15).

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.

2.11 Impairment of financial 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.

62 ALCO HOLDINGS LIMITED ANNUAL REPORT 2017