Annual Report 2025 159 3.6 Financial instruments (i) Non-derivative financial assets Classification and measurement The Stapled Group classifies their financial assets as financial assets at amortised cost. The classification depends on the Stapled Group’s business model for managing the financial assets as well as the contractual terms of the cash flows of the financial asset. The Stapled Group reclassifies financial assets when and only when its business model for managing those assets changes. At initial recognition A financial asset is recognised if the Stapled Group becomes a party to the contractual provisions of the financial asset. At initial recognition, the Stapled Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in the Statement of Total Return. At subsequent measurement Financial assets at amortised cost 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 interest income using the effective interest rate method. (ii) Cash and cash equivalents Cash and cash equivalents comprise cash balances and bank deposits. For the purpose of the Statement of Cash Flows, pledged deposits are excluded whilst bank overdrafts that are repayable on demand and form an integral part of the Stapled Group’s cash management are included as a component of cash and cash equivalents. (iii) Non-derivative financial liabilities The Stapled Group initially recognises debt securities issued on the date that they are originated. Financial liabilities for contingent consideration payable in a business combination are recognised at the acquisition date. All other financial liabilities (including liabilities designated at fair value through profit or loss (“FVTPL”)) are recognised initially on the trade date, which is the date that the Stapled Group becomes a party to the contractual provisions of the instrument. A financial liability is classified as FVTPL if it is classified as held for trading or is designated as such on initial recognition. Directly attributable transaction costs are recognised in total return as incurred. Financial liabilities at FVTPL are measured at fair value and changes therein, including any interest expense, are recognised in total return. The Stapled Group classifies non-derivative financial liabilities under the other financial liabilities category. Such 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 rate method. Other financial liabilities comprised loans and borrowings, and trade and other payables (excluding advance rental and liability for employee benefits). 3 Material Accounting Policies (continued)
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