23 / 53
KUWAIT ENERGY PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2017
21
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial liabilities and equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance
of the contractual arrangement.
Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other financial liabilities.’
Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent consideration that may be paid
by an acquirer as part of a business combination to which IFRS 3 applies, (ii) held for trading, or (iii) it is designated as
at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on the re-measurement recognised
in profit or loss.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of
its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.
Treasury shares
Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. Such
treasury shares may be acquired and held by the Company or by other member of the consolidated group. No gain or
loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.
Any difference between the carrying amount and the consideration, if reissued, is recognised in share premium.
Treasury shares held by the Company are not entitled to any cash dividend that the Company may propose.
Trade payables
Trade payables are recognised initially at fair value, net of transaction costs incurred. Trade payables are subsequently
stated at amortised cost.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred, unless such costs relate to facilities
in which case they are capitalised as non-current assets. Borrowings are subsequently stated at amortised cost; any
difference between the proceeds (net of transaction costs) and the redemption value is recognised in the consolidated
income statement over the year of the borrowings using the effective interest method.
Convertible loans
The convertible loans currently held by the Group are designated as “fair value through profit or loss”. These
borrowings are initially and subsequently measured at fair value and any change in the fair value is recognised in the
income statement. The fair value recognised in profit or loss incorporates any interest paid on the convertible loans
and is included in the ‘change in fair value of convertible loans’ line item in the consolidated income statement. Fair
value is determined in the manner described in Note 23. The transaction costs paid on these borrowings are also
recognised in the income statement.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial amount of time to get ready for their intended use or sale, are added to the
cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Other borrowing costs are calculated on the accrual basis and are recognised in the consolidated income statement in
the period in which they are incurred.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or
they expire.