Notes to CoNsolidated FiNaNCial statemeNts (In thousands of dollars except as noted and per share amounts) 3.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): (k)  Financial instruments: (i)  Cash and cash equivalents:  All financial instruments are classified into one of the following categories: held to maturity financial assets,  available-for-sale financial assets, loans and receivables, other financial liabilities, and financial assets and liabilities  at fair value through profit or loss. Initial measurement of financial instruments is at fair value and subsequent  measurement and recognition in changes in value of financial instruments depends on their classification. Held  to maturity financial assets are initially measured at fair value and subsequently remeasured at amortized cost,  using the effective interest method, less impairment. Available-for-sale financial assets are measured at fair value  at each reporting period and unrealized gains or losses arising from changes in fair value, other than impairment  losses, are recorded in other comprehensive income until such time as the asset is removed from the statement  of financial position at which time the cumulative gain or loss in other comprehensive income is transferred to  profit or loss. The Company’s trade and other receivables are initially measured at fair value and subsequently re-measured at amortized cost, unless the effect of discounting would be immaterial, in which case they are  stated at cost, less impairment. The Company’s trade and other payables have been classified as other financial  liabilities and are, therefore, initially measured at fair value and subsequently at amortized cost, unless the effect  of discounting would be immaterial, in which case they are stated at cost. Other financial liabilities also include  short-term borrowings. Financial assets and liabilities classified at fair value through profit or loss are measured  at fair value at each reporting period with changes in fair value in subsequent periods included in profit or loss.   Financial assets and liabilities measured at fair value use a fair value hierarchy to prioritize the inputs used in  measuring fair value as follows:  Financial assets and liabilities are offset and the net amount is presented in the statement of financial position  when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net  basis or to realize the asset and settle the liability simultaneously.  The Company classifies its cash and cash equivalents as loans and receivables. Cash and cash equivalents  include cash on hand and bank balances and bank overdraft when the latter forms an integral part of the  Company’s cash management.  51 Annual Report 2013 (iii) Level 3 - valuation techniques with observable market inputs (involves assumptions and estimates by  management of how market participants would price the asset or liability). (ii) Level 2 - valuation techniques based on inputs that are other than quoted prices included in Level 1 that are  observable for the asset or liability, either directly (prices) or indirectly (derived from prices); and (i)   Level 1 - valuation based on observable inputs such as quoted prices (unadjusted) in active markets for  identical assets or liabilities;