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AFRICAN DAWN ANNUAL REPORT 2020

Accounting Policies continued

1.13 Investment Income
Investment income relates to interest earned on cash and cash equivalents and is recognised on the same basis as interest income as
outlined above.
1.14 Financial instruments

Financial instruments held by the company are classified in accordance with the provisions of IFRS 9 Financial Instruments. Broadly, the
classification possibilities, which are adopted by the company as applicable, are as follows:

Financial assets which are debt instruments:

• Amortised cost. (This category applies only when the contractual terms of the instrument give rise, on specified dates, to cash flows that are
solely payments of principal and interest on principal, and where the instrument is held under a business model whose objective is met by
holding the instrument to collect contractual cash flows).

Financial liabilities:

• Amortised cost.

Note 1.14 Financial instruments and risk management presents the financial instruments held by the company based on their
specific classifications.

Financial Assets

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits. Cash and cash equivalents are stated at amortised cost which
approximates fair value due to the short-term nature of these instruments.

Trade and other receivables

Trade receivables are grouped as indicated in note 28.
Classification

Trade and other receivables, excluding, when applicable, VAT and prepayments, are classified as financial assets subsequently measured at
amortised cost.

They have been classified in this manner because their contractual terms give rise, on specified dates to cash flows that are solely payments of
principal and interest on the principal outstanding, and the group's business model is to collect the contractual cash flows on trade and other
receivables.

Recognition and measurement
Trade and other receivables are recognised when the group becomes a party to the contractual provisions of the receivables. They are measured,
at initial recognition, at fair value plus transaction costs, if any.
They are subsequently measured at amortised cost.

The amortised cost is the amount recognised on the receivable initially, minus principal repayments, plus cumulative amortisation (interest) using
the effective interest method of any difference between the initial amount and the maturity amount, adjusted for any loss allowance.

Impairment

The Group recognises a loss allowance to the value of the lifetime expected credit losses for trade receivables under the general approach as
envisaged by IFRS 9, excluding prepayments, deposits and Value Added Tax.

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