Financial instrumentsThe company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.Financial instruments are recognised in the company's balance sheet when the company becomes party tothe contractual provisions of the instrument.Basic financial assetsBasic financial assets, which include debtors and cash and bank balances, are initially measured attransaction price including transaction costs and are subsequently carried at amortised cost using theeffective interest method unless the arrangement constitutes a financing transaction, where the transaction ismeasured at the present value of the future receipts discounted at a market rate of interest. Financial assetsclassified as receivable within one year are not amortised.Basic financial liabilitiesBasic financial liabilities, including creditors, bank loan and preference shares that are classified as debt, areinitially recognised at transaction price unless the arrangement constitutes a financing transaction, where thedebt instrument is measured at the present value of the future payments discounted at a market rate ofinterest. Financial liabilities classified as payable within one year are not amortised.Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course ofbusiness from suppliers. Amounts payable are classified as current liabilities if payment is due within one yearor less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially attransaction price and subsequently measured at amortised cost using the effective interest method.TaxationThe tax expense represents the sum of the tax currently payable and deferred tax.Current taxThe tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit asreported in the profit and loss account because it excludes items of income or expense that are taxable ordeductible in other years and it further excludes items that are never taxable or deductible. The company’sliability for current tax is calculated using tax rates that have been enacted or substantively enacted by thereporting end date.Deferred taxDeferred tax liabilities are generally recognised for all timing differences and deferred tax assets arerecognised to the extent that it is probable that they will be recovered against the reversal of deferred taxliabilities or other future taxable profits.Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settledor the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when itrelates to items charged or credited directly to equity, in which case the deferred tax is also dealt with inequity.