Page 65 - Inegrated Annual Report 2020-Eng

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 31 DECEMBER 2020

Cash and cash equivalents include cash on hand and deposits held with banks with original maturities of three
months or less, net of overdraft balances.

Financial assets designated at fair value through OCI (equity instruments)

Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity instruments
designated at fair value through OCI when they meet the definition of equity under IAS 32 Financial Instruments:
Presentation and are not held for trading. The classification is determined on an instrument-by-instrument basis.

Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other
income in the consolidated statement of profit or loss when the right of payment has been established, except
when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which
case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to
impairment assessment.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading, financial assets
designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to
be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose
of selling or repurchasing in the near term.
Financial assets at fair value through profit or loss are carried in the consolidated statement of financial position
at fair value with net changes in fair value recognised in the consolidated statement of profit or loss.

This category includes listed equity investments which the Group had not irrevocably elected to classify at fair
value through OCI. Dividends on listed equity investments are also recognised as other income in the consolidated
statement of profit or loss when the right of payment has been established.

Impairment of financial assets

The Group recognises a loss allowance for expected credit losses on financial assets measured at amortised
cost, lease receivables, trade receivables, as well as on loan commitments and financial guarantee contracts.
No impairment loss is recognised for investments in equity instruments. The amount of expected credit losses
is updated at the end of each reporting period to reflect changes in credit risk since initial recognition of the
respective financial instrument.

The Group always recognises lifetime ECL for trade receivables, using the simplified approach. The expected
credit losses on these financial assets are estimated using a provision matrix based on the Group’s historical
credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an
assessment of both the current as well as the forecast direction of conditions at the reporting date, including time
value of money where appropriate.

For all other financial instruments, the Group recognises lifetime ECL when there has been a significant increase in
credit risk since initial recognition. If, on the other hand, the credit risk on the financial instrument has not increased
significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an
amount equal to 12 months ECL. The assessment of whether lifetime ECL should be recognised is based on
significant increases in the likelihood or risk of a default occurring since initial recognition instead of on evidence
of a financial asset being credit-impaired at the end of the reporting period or an actual default occurring.

i) Significant increase in credit risk

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition,
the Group compares the risk of a default occurring on the financial instrument as at the end of the reporting
period with the risk of a default occurring on the financial instrument as at the date of initial recognition. In
making this assessment, the Group considers both quantitative and qualitative information that is reasonable
and supportable, including historical experience and forward-looking information that is available without undue

2020 Integrated Annual Report 65