ACCOUNTABILITY | FINANCIAL STATEMENTS 217 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 January 2024 2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (CONTINUED) 2.16 Financial instruments (continued) (ii) Impairment of financial assets The Group and the Company assess on a forward looking basis the expected credit loss (“ECL”) associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. The Group and the Company have five types of assets that are subject to the ECL model: (i) Trade and other receivables (ii) Contract assets (iii) Finance lease receivables (iv) Cash and bank balances (v) Derivative assets While cash and bank balances are also subject to the impairment requirements of MFRS 9, there was no impairment loss identified. ECL represents a probability-weighted estimate of the difference between the present value of cash flows according to contracts and the present value of cash flows the Group and the Company expect to receive, over the remaining life of the financial instrument. For financial guarantee contracts, the ECL is the difference between the expected payments to reimburse the holder of the guaranteed debt instrument less any amounts that the Group and the Company expect to receive from the holder, the debtor or any other party.
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