22. Other non-current financial assets, including investments

Accounting policy

On initial recognition, loans, receivables and deposits are accounted for by the Group from the date on which they first arose. All other financial assets are initially recognised on the transaction date. The Group derecognises a financial asset in the balance sheet once the contractual rights to the cash flows from the asset expire, or if the Group transfers the contractual rights to the cash flows from the financial asset by means of a transaction in which virtually all risks and rewards of ownership of the asset are transferred or not retained, and control of the asset transferred is not retained either. If the Group retains or creates an interest in the financial assets being transferred, that interest is recognised as a separate asset or liability.

The Group derecognises a financial liability if the contractual obligations have been discharged or cancelled or have expired Financial assets and liabilities are offset and the resulting net amount is recognised in the balance sheet only if the Group has a legally enforceable right to set off the amounts and if it intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. The Group uses the following financial instruments:

Non-derivative financial instruments

Non-derivative financial instruments include investments in equity securities, deposits and bonds, trade and other receivables, cash and cash equivalents. Non-derivative financial instruments are initially recognised at fair value. After initial recognition, non-derivative financial instruments are measured as described below.

Financial assets at fair value through profit or loss

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in the income statement.

Financial assets at amortised cost

These assets are subsequently measured at amortised cost using the effective interest method. Amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairments are recognised in the income statement. Any gain or loss arising on derecognition is recognised in the income statement.

Fair value through other comprehensive income – investment in debt instruments

These assets are subsequently measured at fair value. Interest income is calculated using the effective interest method, foreign exchange gains and losses and impairments are recognised in the income statement. Other net gains and losses are recognised in other comprehensive income. On derecognition, the gains and losses accumulated in other comprehensive income are reclassified to the income statement.

Fair value through other comprehensive income – equity investment (interest in Eurofima)

These assets are subsequently measured at fair value. Dividends are recognised as income in the income statement, unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in other comprehensive income and are never reclassified to the income statement.

Impairment of financial assets

At each reporting date, financial assets are assessed to determine whether there is objective evidence that they might be impaired on the basis of expected credit losses. A financial asset is deemed to be impaired if there is objective evidence that one or more events occurred that had a negative impact on the expected future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between the carrying amount and the present value of the expected future cash flows, discounted at the original effective interest rate. An impairment loss in respect of investments 'at fair value through other comprehensive income' is calculated on the basis of the fair value.

Financial assets that are significant are individually tested for impairment. Other financial assets are assigned to groups with similar credit risk characteristics and are assessed collectively. All impairment losses are recognised as an expense in the income statement.

An impairment loss is reversed if the reversal can be objectively related to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost and fair value through other comprehensive income – investments in debt instruments, the reversal is credited to the income statement.

Fair value versus the carrying amount

The carrying amounts of the financial assets and liabilities recognised in the balance sheet do not differ materially from the fair values.

For bonds, the fair value is calculated using the available current market prices/closing prices. In principle, the interest in Eurofima is measured at fair value. The net asset value of this interest was used as the best approximation of fair value.

When determining the value of interest swaps and currency derivatives, the Group uses valuation techniques in which all significant data required are derived from observable market data (Level 2).