3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
3.10 Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from
equity, net of any tax effects.
Where share capital recognised as equity is repurchased and held as treasury shares, the amount of the consideration paid,
including directly attributable costs, net of any tax effects, is presented as a deduction from equity. Where such shares are
subsequently reissued, sold or cancelled, the consideration received is recognised as a change in equity. No gain or loss is
recognised in the income statement.
3.11 Financial liabilities
Non-derivative financial liabilities
A financial liability is recognised if the Group becomes a party to the contractual provisions of the liability. Financial liabilities
are derecognised if the Group’s obligations specified in the contract expire or are discharged or cancelled.
Financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial
recognition, these financial liabilities are measured at amortised cost using the effective interest method.
The Group classifies its non-derivative financial liabilities as other financial liabilities.
3.12 Intra-group financial guarantees
Financial guarantee contracts are accounted for as insurance contracts. A provision is recognised based on the Company’s
estimate of the ultimate cost of settling all claims incurred but unpaid at the reporting date. The provision is assessed by
reviewing individual claims and tested for adequacy by comparing the amount recognised and the amount that would be
required to settle the guarantee contract.
3.13 Leases – Group as a lessee
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating
leases by the Group.
Where the Group has the use of assets under operating leases, payments made under the leases are recognised in the income
statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement
as an integral part of the total lease payments made. Contingent rentals are charged to the income statement in the accounting
period in which they are incurred.
71
TELECHOICE INTERNATIONAL LIMITED
2015 ANNUAL REPORT
NOTES TO THE
FINANCIAL STATEMENTS
