Page 239 - BTSGroup ONE REPORT 2021/22_EN

BTS Group Holdings Public Company Limited 6.4 Notes to Consolidated Financial Statements 237
Annual Report 2021/22

increase in credit risk and to be in default using other internal or external 4.28 Derivatives and hedge accounting
information, such as credit rating of issuers. The Group uses debt instruments and derivatives, such as forward
currency contracts, cross currency and interest rate swaps and interest
For trade receivable and contract assets, the Group applies a simplified rate swaps and to hedge its foreign currency risks and interest rate risks.
approach in calculating ECLs. Therefore, the Group does not track
changes in credit risk, but instead recognises a loss allowance based Derivatives are initially recognised at fair value on the date on which
on lifetime ECLs at each reporting date. a derivative contract is entered into and are subsequently remeasured
at fair value. The subsequent changes including interest income are
ECLs are calculated based on its historical credit loss experience and recognised in profit or loss unless the derivative is designated and
adjusted for forward-looking factors specific to the debtors and the effective as a hedging instrument under cash flow hedge. Derivatives are
economic environment. carried as financial assets when the fair value is positive and as financial
liabilities when the fair value is negative.
The Group recognise allowance for expected credit loss on receivables
from personal loan using ECL model. The amount of expect credit losses Derivatives are presented as non-current assets or non-current liabilities
is updated at each reporting period date to reflect changes in credit risk if the remaining maturity of the instrument is more than 12 months and
since initial recognition of the respective financial instrument. it is not due to be realised or settled within 12 months. Other derivatives
are presented as current assets or current liabilities.
A financial asset is written off when there is no reasonable expectation
of recovering the contractual cash flows. Hedge accounting

Impairment of financial guarantee contracts For the purpose of hedge accounting, hedges are classified as:

The Group estimates the expected credit losses of financial guarantee - Fair value hedges when hedging the exposure to changes in the
contracts based on the present value of the payments expected to be fair value of a recognised asset or liability or an unrecognised firm
made to the holder of the contract if a default occurs, discounted using commitment
a risk-adjusted interest rate relevant to the exposure. The calculation is
made using a probability-weighting. The expected credit losses related - Cash flow hedges when hedging the exposure to a variability in cash
to financial guarantee contracts are recognised under provisions. flows that is either attributable to a particular risk associated with a
recognised asset or liability or a highly probable forecast transaction
Offsetting of financial instruments or the foreign currency risk in an unrecognised firm commitment

Financial assets and financial liabilities are offset, and the net amount
is reported in the statement of financial position if there is a currently - Hedges of a net investment in a foreign operation
enforceable legal right to offset the recognised amounts and there is
an intention to settle on a net basis, to realise the assets and settle the At the inception of a hedging relationship, the Group formally designates
liabilities simultaneously.