Annual Report 2019

2. Summary of significant accounting policies (cont’d.) 2.12 Financial assets (cont’d.) 2.12.4 Subsequent measurement – impairment of financial assets (cont’d.) At each reporting date, the Group and the Company assess whether financial assets carried at amortised cost and debt securities at fair value through other comprehensive income are credit-impaired. A financial asset is credit impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. The gross carrying amount of a financial asset is written off (either partially or full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Group or the Company determine that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. 2.13 Financial liabilities 2.13.1 Classification and measurement The Group classifies its financial liabilities in the following category: other financial liabilities. Management determines the classification of financial liabilities at initial recognition. The Group does not hold any financial liabilities carried at fair value through profit or loss (except for derivative financial instruments). See accounting policy Note 2.15 on derivative financial instruments and hedging activities. Other financial liabilities are non-derivative financial liabilities. Other financial liabilities are initially recognised at fair value plus transaction costs that are directly attributable to the acquisition of the financial liability and subsequently carried at amortised cost using the effective interest method. Changes in the carrying value of these liabilities are recognised in the income statements. The Group’s other financial liabilities comprise payables (including intercompanies and related parties’ balances), borrowings and lease liabilities in the statement of financial position. Financial liabilities are classified as current liabilities; except for maturities greater than 12 months after the reporting date, in which case they are classified as non-current liabilities. Financial liabilities are derecognised when the liability is either discharged, cancelled, expired or has been restructured with substantially different terms. 2.14 Offsetting financial instruments Financial assets and liabilities are offset and the net amount presented in the statements of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2019 (CONT’D.) 246 MORE THAN JUST AN AIRLINE >