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Diahuebs 30 di Juni 2022

Notes to the Abbreviated Financial Statements (continued)

A financial asset is credit-impaired when one or more events that paired on initial recognition, but default probability and loss given Fair value measurement
have a detrimental impact on the estimated future cash flows of default are estimated over the life of the instrument. The Company measures financial instruments and non-financial
the financial asset have occurred. • A financial instrument that is credit-impaired, but is not a pur- assets at fair value at each reporting date.
chased or originated credit-impaired financial instrument, the
Evidence that a financial asset is credit-impaired includes the fol- Company records an allowance for lifetime ECL calculated similar Fair value is the price that would be received to sell an asset or
lowing observable data: to lifetime ECL on a financial instrument that has shown a signif- paid to transfer a liability in an orderly transaction between market
• Significant financial difficulty of the debtor or issuer; icant increase in credit risk since initial recognition. participants at the measurement date. The fair value measure-
• A breach of contract, such as a default or past due event; • Purchased or credit-impaired financial assets are assets that are ment is based on the presumption that the transaction to sell the
•The disappearance of an active market for a financial asset credit-impaired on initial recognition. ECL on these assets are asset or transfer the liability takes place either:
because of financial difficulties; always measured on a lifetime basis, discounted by a credit ad-
• It is becoming probable that the debtor will enter bankruptcy justed effective interest rate. The Company has no purchased or • In the principal market for the asset or liability, or
or other financial reorganisation; or credit-impaired financial instruments. • In the absence of a principal market, in the most advantageous
• Rating agencies’ assessments of creditworthiness. market for the asset or liability.
Where lifetime ECL is measured on a collective basis to cater for
Definition of default cases where evidence of significant increases in credit risk at the The principal or the most advantageous market must be accessi-
The Company considers a financial asset to be in default when: individual instrument level may not yet be available, the financial ble by the Company.
• the debtor is unlikely to pay its credit obligations to the Com- instruments are grouped on the basis of shared risk characteristics
pany in full, without recourse by the Company to actions such that include: instrument type; credit risk ratings; nature, size and The fair value of an asset or a liability is measured using the as-
as realising security (if any is held); or industry of debtors; collateral type; and geographic location of the sumptions that market participants would use when pricing the
• the debtor is past due more than 90 days unless the Compa- debtor. asset or liability, assuming that market participants act in their eco-
ny has reasonable and supportable information to demon- nomic best interest.
strate that a more lagging default criterion is more appropriate. If the Company has measured the loss allowance for a financial
instrument at an amount equal to lifetime ECL in the previous re- A fair value measurement of a non-financial asset takes into ac-
In assessing whether a debtor is in default, the Company consid- porting period, but determines at the current reporting date that count a market participant’s ability to generate economic benefits
ers indicators that are qualitative, quantitative and based on data the conditions for lifetime ECL are no longer met, the Company by using the asset in either its highest and best use, or by selling
developed internally and obtained from external sources. measures the loss allowance at an amount equal to 12-month it to another market participant that would use the asset in its
ECL at the current reporting date. highest and best use.
Write-off
The Company writes off financial assets, either partially or in full, Impairment of non-financial assets When one is available, the Company measures the fair value of an
when it has exhausted all practical recovery efforts and has con- The Company assesses at each reporting date whether there is an instrument using the quoted price in an active market. If there is
cluded there is no reasonable expectation of recovery. Indicators indication that an asset may be impaired. If any such indication no quoted price in an active market, the Company establishes fair
that there is no reasonable expectation of recovery include ceas- exists, or when annual impairment testing for an asset is required, value by using valuation techniques. These include the use of
ing enforcement activity and where the Company’s recovery the Company estimates the asset’s recoverable amount. An as- recent arm’s length transactions, reference to other instruments
method is foreclosing on collateral and the value of the collateral is set’s recoverable amount is the higher of an asset’s or cash-gen- that are substantially the same and discounted cash flow analysis
such that there is no reasonable expectation of recovering in full. erating unit’s (CGU) fair value less costs to sell and its value in use. making maximum use of market inputs and relying as little as
The recoverable amount is determined on an individual asset ba- possible on entity-specific inputs.
If the amount to be written off is greater than the accumulated sis, unless the asset does not generate cash inflows that are large-
loss allowance, the difference is first treated as an addition to the ly independent of those from other assets or group of assets. All assets and liabilities for which fair value is measured or dis-
allowance that is then applied against the gross carrying amount. When the carrying amount of an asset or CGU exceeds its recov- closed in the financial statements are categorized within the fair
erable amount, the asset or CGU is considered impaired and writ- value hierarchy, described as follows, based on the lowest level
Measurement of expected credit losses ten down to its recoverable amount. input that is significant to the fair value measurement as a whole:
The measurement of expected credit losses is a function of: Level 1 — Quoted (unadjusted) market prices in active markets
(i)Probability of default - an estimate of the likelihood of default In assessing value in use, the estimated future cash flows are dis- for identical assets or liabilities.
over a given time horizon; counted to their present value using a pre-tax discount rate that
(ii) Loss given default - an estimate of the loss arising in the case reflects current market assessments of the time value of money Level 2 — Valuation techniques for which the lowest level input
where a default occurs at a given time; and and the risks specific to the asset. In determining fair value less that is significant to the fair value measurement is directly or indi-
(iii) Exposure of default - an estimate of the exposure at a future costs of disposal, recent market transactions are taken into ac- rectly observable.
default date, taking into account expected changes in the expo- count. If no such transactions can be identified, an appropriate
sure after the reporting date, including repayments of principal and valuation model is used. These calculations are corroborated by Level 3 — Valuation techniques for which the lowest level input
interest, whether scheduled by contract or otherwise. valuation multiples, quoted share prices for publicly traded compa- that is significant to the fair value measurement is unobservable.
nies or other available fair value indicators. Assets and liabilities, with the exception of freehold and invest-
The assessment of the probability of default and loss given default ment properties, included in level 3 are held at cost, being the fair
is based on historical data adjusted by forward-looking informa- The Company bases its impairment calculations on detailed bud- value of the consideration paid on acquisition and are regularly
tion. Forward-looking information considered by the Company in- gets and forecast calculations, which are prepared separately for assessed for impairment. Freehold and investment properties in-
cludes economic data and forecasts published by governmental each of the Company’s CGUs to which the individual assets are cluded in level 3 are held at fair value which is the estimated re-
bodies and monetary authorities, supranational organisations such allocated. These budgets and forecast calculations generally cover placement value.
as the Organization for Economic Cooperation and Development a period of three years. For longer periods, a long-term growth
and the International Monetary Fund, and selected private-sector rate is applied to project future cash flows after the third year. For assets and liabilities that are recognized in the financial state-
and academic forecasters. ments on a recurring basis, the Company determines whether
Impairment losses of continuing operations are recognized in the transfers have occurred between levels in the hierarchy by re-as-
Expected credit losses are measured as the present value of all statement of income in those expense categories consistent with sessing categorization (based on the lowest level input that is sig-
cash shortfalls i.e. the difference between the cash flows due to the function of the impaired asset. nificant to the fair value measurement as a whole) at the end of
the Company in accordance with the contract and the cash flows each reporting period.
that the Company expects to receive, discounted at the original For assets excluding goodwill, an assessment is made at each
effective interest rate. reporting date as to whether there is any indication that previous- External valuers are involved for valuation of certain assets such as
ly recognized impairment losses may no longer exist or may have investment properties and freehold and leasehold properties. In-
The mechanics of the expected credit losses method are sum- decreased. If such an indication exists, the Company makes an volvement of external valuers is decided annually and selection
marised below: estimate of the recoverable amount. A previous impairment loss is criteria include market knowledge, reputation, independence and
• A financial instrument that is not credit-impaired on initial recog- reversed only if there has been a change in the estimates used to whether professional standards are maintained.
nition, a 12-month ECL allowance is calculated. The Company determine the asset’s recoverable amount since the last impair-
calculates the 12-month ECL allowance based on the expecta- ment loss was recognized. If that is the case, the carrying amount Offsetting financial instruments
tion of a default occurring in the twelve months following the of the asset is increased to its recoverable amount. That increased Financial assets and financial liabilities are offset and the net
reporting date. The expected 12-month default probability is amount cannot exceed the carrying amount that would have amount reported in the statement of financial position only when
applied to a forecast exposure at default and multiplied by the been determined, net of depreciation, had no impairment loss there is a legally enforceable right to offset the recognized
expected loss given default, and discounted by the original ef- been recognized for the asset in prior years. Such reversal is rec- amounts and there is an intention to settle on a net basis or realize
fective interest rate. ognized in the statement of income unless the asset is carried at the assets and settle the liabilities simultaneously.
• When a financial instrument has shown a significant increase in the revalued amount, in which case the reversal is treated as a
credit risk since initial recognition, the Company records an allow- revaluation increase. Cash and cash equivalents
ance for life-time ECL. The mechanics are similar to 12-month Cash and cash equivalents include cash in hand, deposits held at
ECL calculation on a financial instrument that is not credit-im- call with banks and other short-term highly liquid investments
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