ITF

5. Summary of significant accounting policies (continued) f) Inventories Inventories are valued at the lower of cost and net realisable value. Where inventories are held for distribution for no consideration such as development equipment, the carrying amount is held in inventory at cost and is recognised as an expense on distribution. g) Investments and financial assets held at fair value through profit or loss (FVPL) Investments are included in the Statement of Financial Position on trade-date, the date on which the group commits to purchase or sell the asset. Investments are recorded at fair value, determined by reference to quoted market prices at the balance sheet date (classified as level 1 in the fair value hierarchy), with changes recognised directly in the income and expenditure statement. Transaction costs of financial assets carried at FVPL are expensed in profit or loss. h) Trade and other receivables Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment losses. i) Impairment of financial assets Impairment of financial assets held at FVPL is not considered. For impairment of trade receivables, since 1 January 2018 the group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. See note 38(b) for further details. j) Trade and other payables Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method. k) Financial income and expenses Financial income and expenses represent bank interest received and paid by the group, respectively. l) Taxation The taxation charge is based on the result for the year and irrecoverable withholding tax, and takes into account taxation deferred because of timing differences between the treatment for taxation and accounting purposes. Deferred tax is recognised, without discounting, in respect of all timing differences between the treatment of certain items for taxation and accounting purposes which have arisen but not reversed by the balance sheet date, to the extent that the directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. m) Leases The group recognises right-of-use assets and corresponding lease liabilities for lease arrangements in accordance with IFRS 16. During the year, the group entered into a new lease for its Roehampton property. On commencement, right-of-use assets and lease liabilities were recognised, with lease liabilities measured as the present value of remaining lease payments. n) Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity date of three months or less. For the consolidated cash flow statement, cash and cash equivalents are net of outstanding bank overdrafts. NOTES (Forming part of the Financial Statements) ITF Trust Annual Report and Consolidated Financial Statements 22

• Cover