Derecognition
Financial assets are derecognised when:
l The right to receive cash flow from investments expires, or
l The group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the
received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either:
(a) the group has transferred substantially all the risks and rewards of the asset, or
(b) the group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred
control of the asset.
When the group has transferred its rights to receive cash flows from an asset or has entered into a pass-through
arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has
neither transferred nor retained substantially all of the risks and rewards of the asset, it continues to recognise the
transferred asset to the extent of the group’s continuing involvement. In that case, the group also recognises an
associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights
and obligations that the group has retained.
2.13.2 Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans
and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs.
The group’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and
derivative financial instruments.
2.13.2.1 Interest-bearing loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised
cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised
as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or
costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement
of profit or loss.
2.13.2.2 Commodity finance loans
Finance is obtained from banks where inventory serves as security. Senwes can enter into two types of commodity
finance transactions:
l Non-executory contracts
A commodity finance loan is obtained on inventory where the delivery month on Safex is in the current
month.
Commodity finance loans are initially recognised at the fair value of the inventory less location differential,
including directly attributable transaction costs. After initial recognition, commodity finance loans are subsequently
measured at amortised cost using the effective interest rate method. Interest expense is included
in finance cost in profit or loss.
l Executory contracts
Commodity finance loan is obtained on inventory which delivery month on Safex is in future months.
Commodity finance loans are initially recognised at the fair value of the inventory less location differential.
After initial recognition, commodity finance loans are subsequently measured at fair value through profit
and loss, taking into account the movement in the commodity markets. The fair value movements are included
in profit or loss. Interest expense is included in finance cost in profit or loss.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms,
or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying
amounts is recognised in the statement of profit or loss.
Senwesbel Limited Reg no: 1996/017629/06 SENWESBEL ANNUAL FINANCIAL STATEMENTS 2020 98