Annual Report 2021

ANNUAL REPORT 2021 179 37. FINANCIAL RISK MANAGEMENT (CONTINUED) 37.1 Financial risk factors (continued) (ii) Credit risk and impairment assessment (continued) The following table summarises average loss rates of each internal credit rating of trade debtors: Internal credit rating Average loss rate 2021 2020 A 0.01% 0.06% B 0.26% 0.21% C 4.72% 2.36% D 94.79% 81.86% The estimated loss rates are estimated based on historical observed default rates over the expected life of trade debtors and background check results are adjusted for forward-looking information that is available without undue cost or effort. The internal credit rating of trade debtors is regularly reviewed by management to ensure relevant information about specific debtors is updated. The following table shows the movement in lifetime ECL that has been recognised for trade debtors. Lifetime Lifetime ECL ECL (not credit- (credit- impaired) impaired) Total HK$’million HK$’million HK$’million As at 1 January 2020 4 81 85 Impairment losses recognised — 12 12 Impairment losses reversed (1) (37) (38) Written-off — (4) (4) Exchange adjustments — 3 3 As at 31 December 2020 3 55 58 Impairment losses recognised 2 2 4 Impairment losses reversed — (1) (1) Written-off — (2) (2) Exchange adjustments (2) 2 — As at 31 December 2021 3 56 59 The Group makes full provision for a trade debtor when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, or when the trade debtors are over three years past due, whichever occurs earlier.