2.7 Accounting Policies continued (p) Impairment of financial assets continued e. Collateral valuation The Group and the Company seek to use collateral, where possible, to mitigate its risks on financial assets. The collateral comes in various forms such as cash, securities, guarantees, real estate, receivables, other non-financial assets and credit enhancements such as netting agreements. The fair value of collateral is generally assessed, at a minimum, at inception and when the Group and the Company determine there is a requirement to do so. To the extent possible, the Group and the Company use active market data for valuing financial assets held as collateral. Other financial assets which do not have readily determinable market values are valued using models. Non-financial collateral, such as real estate, is valued based on data provided by independent surveyors. f. Modification of financial assets A modification of a financial asset occurs when the contractual terms governing the cash flows of a financial asset are renegotiated or otherwise modified between initial recognition and maturity of the financial asset. A modification affects the amount and/or timing of the contractual cash flows either immediately or at a future date. The Group and the Company renegotiate loans to customers in financial difficulties to maximise collection and minimize the risk of default. Indicators of financial difficulties include default on covenants, bankruptcy, or significant concerns raised. Once the terms have been renegotiated, any impairment is measured using the original interest rates as calculated before the modification of terms. In the case where the financial asset is derecognised, the loss allowance for ECL is remeasured at the date of derecognition to determine the net carrying amount of the asset at that date. If modifications are substantial either quantitatively or qualitatively, the loan is derecognised as explained under write-offs. g. Write-offs Financial assets are written off either partially or in their entirety only when the Group and the Company have no reasonable expectations of recovering the financial assets. This is the case when the Group and the Company determine that the borrower does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. If the amount to be written off is greater than the accumulated loss allowance, the difference is first treated as an addition to the allowance that is then applied against the gross carrying amount. Any subsequent recoveries are credited to credit loss expense. (q) Stated capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as deduction, net of taxes, from proceeds. When the Company purchases its equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or reissued. When such shares are subsequently reissued, any net consideration received is included in equity attributable to the Company’s equity holders. (r) Segment reporting Segment information presented relates to operating segments that engage in business activities for which revenues are earned and expenses incurred. (s) Dividend distribution Dividend distribution to the Group’s and the Company’s shareholders is recognised as a liability in the financial statements and deducted from equity in the period in which the dividends are declared. Assets and liabilities classified as held for sale are presented separately as current items in the statement of financial position. (t) Contingent liabilities Contingent liabilities are possible obligations whose existence will be confirmed by uncertain future events that are not wholly within the control of the entity. The Group and the Company record a contingent liability if the contingency is likely and the amount of the liability can be reasonably estimated. Where the contingency loss cannot be estimated, the contingent liability is disclosed in the notes to the financial statements. Explanatory Notes 30 September 2024 2. ACCOUNTING POLICIES continued 140
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