Page 174 - UBP - IR2020

FINANCIAL STATEMENTS
Notes to the financial statements
For the year ended June 30 2020
2 ACCOUNTING POLICIES (CONTINUED)
2 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(k) Financial instruments (Continued)
Financial assets (Continued)
Derecognition (continued)
When the Group has has transferred its rights to to receive cash flows from an an an asset or has has entered into a a a a a a a a a a pass-through arrangement it it it it evaluates if and and to what extent it it it it has has retained the the risks and and rewards of ownership When it it it it has has neither transferred nor retained substantially all all of of of the the the the risks and rewards of of of the the the the asset asset nor transferred control of of of the the the the asset asset the the the the Group continues to to recognize recognize the the the transferred asset to to the the the extent of its continuing involvement In that case the the the Group also recognizes an an associated associated liability liability The transferred asset and and the the associated associated liability liability are measured on a a a a a a a a a a a a a a a basis that reflects the the rights and and obligations that the Group has retained Continuing involvement that takes the the the the form of of a a a a a a a a a guarantee over the the the the transferred asset is measured at at the the the the lower of of the the the the original carrying amount amount of of the the the asset and the the the maximum amount amount of of consideration that the the the Group could be required to repay Impairment of financial assets The Group recognises an an allowance for for expected credit losses (ECLs) for for all all debt instruments not held at fair value through profit or or loss ECLs are based on on on the the the difference between the the the contractual cash flows due in accordance with the the the contract contract and all the the the cash flows that the the the Group expects to receive discounted at at at an an approximation of the the the original effective interest rate The expected cash cash flows flows will include cash cash flows flows from the the sale of collateral held or other credit enhancements that are integral to the contractual terms ECLs are recognised in in in two stages For credit credit exposures for which there has not been a a a a a a significant increase in in in credit credit risk since initial recognition ECLs are are provided for credit losses that that result from default events that that are are possible within the next 12-months (a 12-month 12-month ECL) For those credit credit exposures for which there has been a a a a a significant increase in in credit credit risk since initial recognition a a a a a loss loss allowance is required for credit losses expected over the the remaining life of the the exposure irrespective of of the the timing of of the the default (a lifetime ECL) For trade and and some other receivables and and contract assets the the Group applies a a a a a a a a a a a a simplified approach in in calculating ECLs Therefore the Company does not track changes in in credit risk but instead recognizes a a a a a a a a loss allowance based on lifetime ECLs at at at at each reporting date The Group has established a a a a a a a a a a provision matrix that is is is is based on on its historical credit loss experience adjusted for for forward-looking factors specific to to to the the debtors and the the economic environment Some other receivables receivables are are of of the the the the the same nature as trade receivables receivables but given that these are are not the the the the the activities of of the the the the the Group these are not classified as as as trade receivables receivables As those other receivables receivables have a a a a a a a a a a a maturity of 1 year or less the the the Group has applied the the the practical expedient of IFRS 9 Where the the the balance due is repayable on demand and and the the the borrower has enough liquid assets to settle the the the balance due on demand the the the probability of default is minimal Where the the the Borrower does not have enough liquid assets assets to to settle settle the the the the balance balance on demand but own other assets assets that can be sold to to settle settle the the the the balance balance due the the the the loss given default is is is nil as as as the the the the net realisable value of the the the the assets cover the the the the outstanding balance In that case the the the the ECL is is is limited to the the the the the effect of of discounting the the the the the amount due of of the the the the the loan over the the the the the period until the the the the the cash is is is realised and since those companies can realise cash within a a a a a a short period of of time the effect of of discounting is is is immaterial The Group considers a a a a a a a a a a a a financial asset fin in in in default when contractual payments are 120 days past due However fin in in in certain cases the the Group may also consider a a a a a a a a a a a a a financial asset to be fin in in in in default when internal or or external information indicates that the the Group is unlikely to to receive the outstanding contractual amounts in in in in full before taking into account any credit enhancements held by the the the Group A financial asset is is written off when there is is no reasonable expectation o of recovering the the the contractual cash flows 174 - UBP INTEGRATED REPORT 2020