59 AUDITED FINANCIAL STATEMENTS 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021 4 FINANCIAL RISK MANAGEMENT (CONTINUED) (a) Financial risk management policies (continued) Credit risk (continued) (i) Impairment of financial assets (continued) a) Trade receivables, trade amounts due from intercompany and contract assets using simplified approach (continued) The trade amounts due from intercompany and trade receivables are categorised into the following categories for ECL purposes: Category Group’s definition of category Credit-impaired Default amounts that meets the unlikeliness to pay criteria (Note 3(h)(iii)) Non-credit impaired Amounts that are not credit-impaired, including amounts assessed based on collective assessments. b) Other receivables, loans due from intercompany and non-trade amounts due from intercompany using general 3-stage approach The Group uses three categories for other receivables which reflect their credit risk and how the loss allowance is determined for each of those categories (3 stage approach). These financial assets are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the group, and a failure to make contractual payments for a period of greater than 365 days past due. A summary of the assumptions underpinning the Group’s ECL model is as follows: Category Group’s definition of category Basis for recognising ECL Performing Debtors have a low risk of default and a strong capacity 12 month ECL to meet contractual cash flows Underperforming Debtors for which there is a significant increase in credit Lifetime ECL risk or significant increase in credit risk is presumed if interest and/or principal repayments are 30 days past due Non-performing Interest and/or principal repayments where there is evidence Lifetime ECL indicating the asset is credit-impaired (credit-impaired) Write-off There is evidence indicating that there is no reasonable Asset is written off expectation of recovery based on unavailability of debtor’s sources of income or assets to generate sufficient future cash flows to repay the amount
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