Asia-Pacific Strategic Investments Limited - Annual Report 2021

Notes to the Financial Statements For the financial year ended 30 June 2021

28

Financial risk management (continued)

(b)

Credit risk (continued)

(ii)

Other receivables (continued)

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Group and the Company consider reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s and the Company’s historical experience and informed credit assessment. If credit risk has not increased significantly since initial recognition or if the credit quality of the financial instruments improves such that there is no longer a significant increase in credit risk since initial recognition, the loss allowance is measured at an amount equal to 12-month ECLs. As at 30 June 2021 and 2020, the Group and the Company performed an assessment of qualitative and quantitative factors which are indicative of the risk of default (including but not limited to external ratings, audited financial statements, management accounts and cash flow projections, available press information and applying experienced credit judgement) and an assessment of impairment using the 12-month ECL basis on these financial assets. The Group and the Company concluded that the loss allowance provided for other receivables is adequate. Non-trade receivables from subsidiary corporations are provided mainly for short term funding requirements. The Company uses a similar approach as described in Note 28(b)(ii) for assessment of ECL for these receivables. Impairment on these balances has been measured on the 12-month expected loss basis which reflects the low credit risk of the exposures. The Company concluded that the loss allowance provided for non-trade receivables from subsidiary corporations is adequate. As at 30 June 2021, the Company has provided a loss allowance of S$6,045,000 (2020: S$6,045,000) as there is no reasonable ground to recover the receivables from these subsidiary corporations.

(iii) Non-trade receivables from subsidiary corporations

(iv) Cash and cash equivalents

Cash and cash equivalents are placed only with reputable licensed financial institutions with high credit-ratings. The cash balances are measured on a 12-month expected credit loss and subjected to immaterial credit loss.

(c)

Liquidity risk

Prudent liquidity risk management includes maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. At the balance sheet date, assets held by the Group and the Company for managing liquidity risk included cash and cash equivalents as disclosed in Note 11 to the financial statements. Management monitors rolling forecasts of the Group’s and Company’s liquidity reserve and cash and cash equivalents (Note 11) on the basis of expected cash flow. This is generally carried out in the operating entities of the Group in accordance with the practice and limits set by the Group.

ANNUAL REPORT 2021

113