ST Engineering Annual Report 2020

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 (CURRENCY – SINGAPORE DOLLARS UNLESS OTHERWISE STATED) C14 Financial risk management objectives and policies (continued) Expected credit loss assessment (continued) Trade receivables and contract assets (continued) The movement in the allowance for impairment in respect of trade receivables and contract assets during the year were as follows: Lifetime ECL Group 2020 2019 $’000 $’000 At 1 January 97,749 38,986 Impairment loss recognised 26,686 53,473 Amounts written off (19,290) (8,066) Acquisition of subsidiaries – 12,142 Disposal of subsidiaries – (8) Translation difference (497) 1,222 At 31 December 104,648 97,749 Bank balances and other liquid funds Bank balances and other liquid funds are placed with financial institutions, which mainly have long-term rating of A3 by Moody’s or A- by Standard & Poor’s or the equivalent by a reputable credit rating agency. Impairment on bank balances and other liquid funds has been measured on the 12-month expected loss basis and reflects the short maturities of the exposures. The Group considers that its bank balances and other liquid funds to have low credit risk based on the external credit ratings of the counterparties. The amount of the allowance on bank balances and other liquid funds is insignificant. Other financial assets Other financial assets comprise amounts due from related parties and other receivables, which are mostly short-term in nature. Impairment on other financial assets has been measured on the 12-month expected loss basis and reflects the short maturities of exposures. The Group considers its other financial assets to have low credit risk and the amount of the allowance on other financial assets is insignificant. Recognition and measurement The Group recognises loss allowances for ECLs on financial assets measured at amortised cost, contract assets (as defined in SFRS(I) 15), debt investments at FVOCI and financial guarantee contracts, but not for equity investments. Loss allowances of the Group are measured using either the simplified or general approach. The Group applies the simplified approach to provide for ECLs for all trade receivables (including lease receivables) and contract assets. The simplified approach requires the loss allowance to be measured at an amount equal to lifetime ECLs. The Group applies the general approach to provide for ECLs on all other financial instruments and financial guarantee contracts. Under the general approach, the loss allowance is measured at an amount equal to 12-month ECLs at initial recognition. / ST ENG I NEER I NG 210