Sustainability and Governance Report

Notes to the FINANCIAL STATEMENTS [Note 28. Financial risk management objectives and policies (cont'd) (c) Credit risk (cont'd) The Group has determined the default event on a financial asset to be when the counterparty fails to make contractual payments, within 60 days when they fall due, which are derived based on the Group's historical information. The Group considers "low risk" to be an investment grade credit rating with at least one major rating agency for those investments with credit rating. To assess whether there is a significant increase in credit risk, the company compares the risk of a default occurring on the asset as at reporting date with the risk of default as at the date of initial recognition. The Group considers available reasonable and supportive forwarding-looking information which includes the following indicators: - Internal credit rating External credit rating Actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the borrower's ability to meet its obligations - Actual or expected significant changes in the operating results of the borrower - Significant increases in credit risk on other financial instruments of the same borrower Significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements Significant changes in the expected performance and behaviour of the borrower, including changes in the payment status of borrowers in the group and changes in the operating results of the borrower. Regardless of the analysis above, a significant increase in credit risk is presumed if a debtor is more than 30 days past due in making contractual payment. The Group determined that its financial assets are credit-impaired when: There is significant difficulty of the issuer or the borrower - A breach of contract, such as a default or past due event It is becoming probable that the borrower will enter bankruptcy or other financial reorganisation There is a disappearance of an active market for that financial asset because of financial difficulty The Group categorises a loan or receivable for potential write-off when a debtor fails to make contractual payments more than 120 days past due. Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Group. Where loans and receivables have been written off, the company continues to engage enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit or loss. The following are credit risk management practices and quantitative and qualitative information about amounts arising from expected credit losses for each class of financial assets. 92 92

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