Cloudberry Clean Energy Annual report 2020

77 Cloudberry Annual report 2020 Financial statements The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows. For financial assets measured at fair value, gains and losses will either be recorded in profit or loss or other compre- hensive income. For investments in equity instru- ments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. Financial assets recognised at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the income statement. Gains or losses arising from changes in the fair value of the financial instruments at fair value through profit or loss, including interest and dividends, are recognised in the income statement as other gain/losses. Derivatives are always meas- ured at fair value through profit or loss, unless des- ignated as a hedging instrument. When designated as a cash flow hedging instrument measurement is change in fair value are recognised in other compre- hensive income. Financial assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/ (losses) together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or loss. Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. Financial liabilities The group classifies its financial liabilities at initial recognition in the following categories · Financial liabilities at fair value through profit or loss · Loans and borrowings including bank overdrafts · Payables · Derivatives designated as hedging instruments in an effective hedge 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. A financial liability is derecognised when the obli- gation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on sub- stantially 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. Borrowing costs Borrowings are classified as current liabilities unless the group has an unconditional right to defer settle- ment of the liability for at least 12 months after the reporting period. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualify- ing asset is includes as a part of cost. Other borrow- ing costs are recognised as an expense. Fair value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. All assets and liabilities for which fair value is meas- ured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: · Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities · Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is observable, directly or indirectly, in a non-active market