Annual Report 2017

118 Annual Report 2017 Deferred income tax is recognised, using the liability method, on temporary differences arising from differences between the tax base of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. 2.20Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the Group’s senior management. 3. Financial risk management Financial risk factors The Group’s activities expose it to a variety of financial risks: currency risk, fair value interest rate risk and cash flow interest rate risk, credit risk, liquidity risk and risk from investments and deposits. The Group’s financial risk management programme focuses on investment management under investment policies and strategic asset allocation which is approved by the SET’s Board of Governors and subsidiaries’ Board of Director. The investment committees are strictly established to oversee the investment in compliance with the policies and strategic asset allocation defined. The investment policy aims on maintaining stability of the principal, liquidity and return on the appropriate level of risk. 3.1 Foreign exchange risk The Group has no significant exposure to foreign currency risk relates due to its accounts receivable and accounts payable are mainly made in Thai Baht, except for investments in some foreign mutual funds which is in foreign currency. The Group has appropriately applied forward exchange contracts to hedge foreign exchange risk of such investments. Accounting for derivative financial instruments and hedging activities Foreign currency forward contracts protect the Group from movements in exchange rates. The Group enters into contract establishing the rate at which a foreign currency asset will be realised or a foreign currency liability will be settled in the future. The Group recognise foreign currency forward contracts transaction in the financial statements in fair value measurement. The unrealised gain (loss) from fair value measurement of foreign currency forward contracts will be included in unrealised gain (loss) on exchange rate in statements of comprehensive revenues and expenses. Disclosures about derivative financial instruments to which the Group is a party are provided in note 37. 3.2 Interest rate risk Interest rate risk arises from fluctuations in market interest rates which may affect the Group’s operating results and cash flow. The Group does not have interest rate derivative in order to manage fluctuation of the interest rate. 3.3 Credit risk The Group has no significant concentrations of credit risk. The Group has appropriate policies in place to ensure that the Group sell products and provide services to customers who have appropriate credit history.