2. ACCOUNTING POLICIES (CONTD.) 2.4 SUMMARY OF MATERIAL ACCOUNTING POLICIES (CONTD.) (h) Financial instruments (contd.) (i) Financial assets (contd.) Financial assets at fair value through profit or loss (“FVTPL”) FVTPL are carried in the statement of financial position at fair value with net changes in fair value recognised in the statement of profit or loss. This category includes short term investments which the Group and the Company had not irrevocably elected to classify at fair value through OCI. Impairment The Group and the Company recognise an allowance for expected credit losses (“ECLs”) for all debt instruments not held at fair value through profit or loss. For trade receivables and contract assets, the Group and the Company apply a simplified approach in calculating ECLs. Therefore, the Group and the Company do not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. In measuring ECLs, the Group and the Company take into account reasonable and supportable information that is available without undue cost or effort. This includes information about past events, current conditions and forward-looking factors specific to the debtors. The Group and the Company consider a financial asset in default when contractual payments are 120 days past due. However, in certain cases, the Group and the Company may also consider a financial asset to be in default when internal or external information indicates that the Group and the Company are unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group and the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows. (ii) Financial liabilities Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings and payables. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group classifies financial liabilities that arise from supplier finance arrangement within trade and other payables in the statement of financial position if they have a similar nature and function to trade payables. This is the case if the supplier finance arrangement is part of the working capital used in the Group’s normal operating cycle, the level of security provided is similar to trade payables and the terms of the liabilities that are part of the supply chain finance arrangement are not substantially different from the terms of trade payables that are not part of the arrangement. Cash flows related to liabilities arising from supplier finance arrangements that are classified in trade and other payables in the consolidated statement of financial position are included in operating activities in the consolidated statement of cash flows. The Group’s and the Company’s financial liabilities include trade and other payables, borrowings and lease liabilities. Financial liabilities at FVTPL Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL or when doing so results in a more relevant information. The Group has designated deferred consideration payable at FVTPL. Notes to the Financial Statements For the year ended 31 December 2024 291 FINANCIAL STATEMENTS
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