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NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 March 2018
In cases where fair value is determined using data Loans and Receivables
which is not observable, the difference between the
transaction price and model value is only recognized in Loans and receivables are financial assets with fixed or
the profit or loss when the inputs become observable, or determinable payments that are not quoted in an active
when the instrument is de recognized. The ‘Day 1 loss’ market. Such assets are recognized initially at fair
arising in the case of loans granted to employees at value plus any directly attributable transaction costs.
concessionary rates under uniformly applicable schemes Subsequent to initial recognition loans and receivables
is deferred and amortized using Effective Interest Rates are measured at amortized cost using the effective
(EIR) over the remaining service period of the employees interest method, less any impairment losses.
or tenure of the loan whichever is shorter.
3.2.4 Classification and Subsequent Measurement of Loans and receivables comprise of cash and cash
Financial Assets equivalents, deposits with banks and other financial
At the inception a financial asset is classified into one institutions, investments in Standing Deposit Facilities
of the following. (REPO’s), lease receivables, hire purchase receivables,
• Financial assets at fair value through profit or loss advances and other loans granted, factoring receivables,
• Held to maturity financial assets amount due from related parties and other receivables.
• Loans and receivables
• Financial assets available-for-sale - Cash and cash equivalents
The subsequent measurement of financial assets Cash and cash equivalents comprise cash balances
depends on their classification. and call deposits with maturities of three months or
Financial assets at Fair Value Through Profit or Loss less from the acquisition date that are subject to an
(FVTPL) insignificant risk of changes in their fair value, and are
A financial asset is classified as fair value through profit used by the Company in the management of its short-
or loss if it is held for trading or is designated as such term commitments.
upon initial recognition. Financial assets are designated - Finance leases and hire purchase
at fair value through profit or loss if the company When the Company is the lessor in a lease agreement
manages such investments and makes purchase and that transfers substantially all of the risks and rewards
sale decisions based on their fair value in accordance incidental to ownership of the asset to the lessee,
with the company's investment strategy. Attributable the arrangement is classified as a finance lease and a
transaction costs are recognized in statement of profit receivable equal to the net investment in the lease is
or loss as incurred. recognized. Amounts receivable under finance leases
Financial assets at fair value through profit and loss are included under “Rentals receivable on leased
are carried in the statement of financial position at assets”. Leasing balances are stated in the statement
fair value with changes in fair value recognized in the of financial position after deduction of initial rentals
statement of profit or loss. received, unearned lease income and the provision for
Financial assets at fair value through profit or loss impairment losses.
comprises of quoted equity instruments and unit trusts - Advances and other loans to customers
unless otherwise have been classified as available-for- Advances and other loans to customers comprised of
sale. revolving loans and loans with fixed instalment.
Held to Maturity (HTM) financial investments
Financial assets with fixed or determinable payments Loans to customers are reflected in the Statement of
and fixed maturities are classified as held to maturity Financial Position at amounts disbursed less repayments
when the company has the positive intention and and provision for impairment losses.
ability to hold it to maturity. Held-to-maturity financial
assets are recognized initially at fair value plus any Financial Investments Available For Sale (AFS)
directly attributable transaction costs. Subsequent to ‘Available-for-sale investments’ are non-derivative
initial recognition held to-maturity financial assets are investments that are designated as available-for-sale
measured at amortized cost using the effective interest or are not classified as another category of financial
method, less any impairment losses. assets. Available-for-sale investments comprise
Amortized cost is calculated by taking into account equity securities and debt securities. Unquoted equity
any discount or premium on acquisition and fees securities whose fair value cannot be measured
or costs that are an integral part of the effective reliably are carried at cost. All other available-for-sale
interest rate (EIR). The EIR amortization is included in investments are measured at fair value after initial
interest income in the Statement of Profit or Loss and recognition.
Other Comprehensive Income. The losses arising from Interest income is recognized in profit or loss using the
impairment are recognized as impairment cost in the effective interest method. Dividend income is recognized
Statement of Profit or Loss and Other Comprehensive in profit or loss when the Company becomes entitled to
Income. the dividend. Impairment losses are recognized in profit
or loss.
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Other fair value changes, other than impairment losses,
are recognized in OCI and presented in the AFS reserve
within equity. When the investment is sold, the gain or
loss accumulated in equity is reclassified to profit or
loss.
UB Finance
