Page 238 - BTSGroup ONE REPORT 2021/22_EN

236 l Introduction l Nature of Business l Organisation and Shareholding Structure l Business Review l Corporate Governance l Financial Statements l Other Information l
classified as liabilities to be subsequently measured at amortised cost
using the EIR method. Gains and losses are recognised in profit or loss
when the liabilities are derecognised as well as through the EIR
amortisation process. In determining amortised cost, the Group takes
into account any discounts or premiums on acquisition and fees or costs
that are an integral part of the EIR. The EIR amortisation is included in
finance costs in profit or loss.
The initial recognition of financial assets and financial liabilities are
recogised as at transaction date. They are date which the Group
becomes party to the contractual provisions of the instrument including
normal purchase and sale transactions. Such purchase and sale of
financial assets must deliver assets as determined by regulations or
customs of market.
Financial guarantee contracts
Provisions on financial guarantee contracts are initially recognised in the
financial statements at fair value. The provision under each guarantee
contract is subsequently measured at the higher of the amount initially
recognised less cumulative amortisation, and the allowance for expected
credit losses.
The guarantee fee income is recognised as other income in profit or loss
by amortising the initial fair value on a straight-line basis over the life
of the guarantee.
Regular way purchases and sales of financial assets
Regular way purchases or sales of financial assets that require delivery
of assets within a time frame established by regulation or convention
in the marketplace are recognised on the trade date, which is the date
on which an asset is delivered.
Derecognition of financial instruments
A financial asset is primarily derecognised when the rights to receive
cash flows from the asset have expired or have been transferred and
either the Group has transferred substantially all the risks and rewards
of the asset, or the Group has transferred control of the asset.
A financial liability is derecognised when the obligation under the liability
is discharged or cancelled or expires. When an existing financial liability
is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified,
such an exchange or modification is treated as the derecognition of the
original liability and the recognition of a new liability. The difference in
the respective carrying amounts is recognised in profit or loss.
Impairment of financial assets
The Group recognises an allowance for expected credit losses (“ECLs”)
for all debt instruments not held at FVTPL. ECLs are based on the
difference between the contractual cash flows due in accordance with
the contract and all the cash flows that the Group expects to receive,
discounted at an approximation of the original effective interest rate.
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 (a lifetime ECL).
The Group considers a significant increase in credit risk to have
occurred when contractual payments are more than 30 days past due
and considers a financial asset as credit impaired or default when
contractual payments are 90 days past due. However, in certain cases,
the Group may also consider a financial asset to have a significant