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Notes to the
Financial Statements
As at 31 March 2019
2.
Significant accounting policies (cont’d.)
2.3 Summary of significant accounting policies (cont’d.)
(r) Financial assets (cont’d.)
Derecognition (cont’d.)
Continuing involvement that takes the form of a guarantee over the transferred asset is measured
at the lower of the original carrying amount of the asset and the maximum amount of consideration
that the Group and the Company could be required to repay.
(s) Impairment of financial assets
The Group and the Company recognises an allowance for expected credit losses (“ECLs”) for all
debt instruments not held at fair value through profit or loss. ECLs are based on difference between
the contractual cash flows due in accordance with the contract and all the cash flows that the Group
and the Company expect to receive, discounted at an approximation of the original effective interest
rate. The expected cash flows will include cash flows from the sale of collateral held or other credit
enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs are provided for credit losses that result from
default events that are possible within the next 12-months (a 12-month ECL). For those credit
exposures for which there has been a significant increase in credit risk since initial recognition, a loss
allowance is required for credit losses expected over the remaining life of the exposure, irrespective
of the timing of the default (a lifetime ECL).
For trade receivables and contract assets, the Group applies a simplified approach in calculating
ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss
allowance based on lifetime ECLs at each reporting date. The Group and the Company has established
a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking
factors specific to the debtors and the economic environment.
The Group and the Company consider a financial asset in default when contractual payments are 90
days past due. However, in certain cases, the Group and the Company may also consider a financial
asset to be in default when internal or external information indicates that the Group and the Company
are unlikely to receive the outstanding contractual amounts in full before taking into account any
credit enhancements held by the Group and the Company. A financial asset is written off when there
is no reasonable expectation of recovering the contractual cash flows.
(t) Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit
or loss or other financial liabilities, as appropriate.
financial
statements
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