NOTES TO THE FINANCIAL STATEMENTS
At 31 December 2019
Gross carrying amount 28,920 212 1,167 30,299
Company
At 31 December 2020
Gross carrying amount 4,816 4,400 3,518 12,734
At 31 December 2019
Gross carrying amount 8,737 – – 8,737
The exposure of credit risk for trade receivables by geographical region is as follows:
Group Company
2020 2019 2020 2019
RM’000 RM’000 RM’000 RM’000
Australia 197 500 – 116
China 7,998 3,769 7,998 3,769
Europe 631 – – –
Hong Kong 166 – – –
India 2,258 1,692 2,258 1,455
Japan 13,603 16,714 – 1,343
Korea 1,141 1,343 1,141 –
Malaysia 3,564 3,364 643 262
United Arab Emirates 442 1,099 273 1,022
United State of America 854 – – –
Others 759 1,818 421 770
31,613 30,299 12,734 8,737
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
33. FINANCIAL INSTRUMENTS (CONTINUED) (b) Financial risk management (Continued)
(i) Credit risk (Continued)
Other receivables and other financial assets
For other receivables and other financial assets (including other investments and cash and cash equivalents), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties. At the reporting date, the Group’s and the Company’s maximum exposure to credit risk arising from other receivables and other financial assets is represented by the carrying amount of each class of financial assets recognised in the statements of financial position.
The Group and the Company consider the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the Group and the Company compare the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forward-looking information.
Some intercompany loans between entities within the Group are repayable on demand. For loans that are repayable on demand, expected credit losses are assessed based on the assumption that repayment of the loan is demanded at the reporting date. If the borrower does not have sufficient highly liquid resources when the loan is demanded, the Group and the Company will consider the expected manner of recovery and recovery period of the intercompany loan.
The Group and the Company consider the other receivables and financial assets to have low credit risk.
At the end of the reporting date, the Group and the Company did not recognize any loss allowance for impairment for other receivables and other financial assets.
Refer to Note 3.11(a) for the Group’s and the Company’s other accounting policies for impairment of financial assets.
Financial guarantee contracts
The Company is exposed to credit risk in relation to financial guarantees given to banks for credit facilities granted to certain subsidiaries. The Company monitors the results of the subsidiaries and their repayment on an on-going basis. The maximum exposure to credit risks amounts to RM9,007,477 (2019:
RM11,101,981) representing the maximum amount the Company could pay if the guarantee is called on as disclosed in Note 33(b)(iii) to the financial statements. As at the reporting date, there was no loss allowance for impairment as determine by the Company for the financial guarantee contract.
The financial guarantees have not been recognised since the fair value on initial recognition was not material as the guarantee is provided as credit enhancement to subsidiaries’ secured borrowings.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
33. FINANCIAL INSTRUMENTS (CONTINUED) (b) Financial risk management (Continued)
(ii) Foreign currency risk
Foreign currency risk is the risk of fluctuation in fair value or future cash flows of a financial instrument as a result of changes in foreign exchange rates. The Group’s and the Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s and the Company’s operating activities (when sales and purchases that are denominated in a foreign currency).
Management has set up a policy that requires all companies within the Group and the Company to manage their treasury activities and exposures. In addition, the Group and the Company also take advantage of any natural effects of its foreign currencies revenues and expenses by maintaining current accounts in foreign currencies.
The Group’s and the Company’s exposure to foreign currency (a currency which is other than currency of the Group entities) risk, based on carrying amounts as at the end of reporting period is as follows:
United
Chinese Indian Euro Japanese Singapore States Indonesian Yuan Rupee Dollar Yen Dollar Dollar Rupiah RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Group
2020
Trade and other
receivables – – – – – 25,646 –
Cash and short-
term deposits 28 1 – 10 – 8,798 –
Trade and other
payables – – (397) – (52) (1,675) –
28 1 (397) 10 (52) 32,769 –
United
Chinese Indian Euro Japanese Singapore States Indonesian Yuan Rupee Dollar Yen Dollar Dollar Rupiah RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 2019
Trade and other
receivables 1,290 – – – – 24,644 8
Cash and short-
term deposits 551 1 – 6 – 5,970 –
Trade and other
payables – – (753) – (24) (2,925) –
1,841 1 (753) 6 (24) 27,689 8
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
33. FINANCIAL INSTRUMENTS (CONTINUED) (b) Financial risk management (Continued)
(ii) Foreign currency risk (Continued)
The Group’s and the Company’s exposure to foreign currency (a currency which is other than currency of the Group entities) risk, based on carrying amounts as at the end of reporting period is as follows:
(Continued)
United
Chinese Indian Euro Japanese States Indonesian Yuan Rupee Dollar Yen Dollar Rupiah RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Company
2020
Trade and other receivables – – – – 12,102 –
Cash and short-term deposits 26 1 – 10 2,701 –
Trade and other payables – – (152) – (166) –
26 1 (152) 10 14,637 –
United
Chinese Indian Euro Japanese States Indonesian Yuan Rupee Dollar Yen Dollar Rupiah RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 2019
Trade and other receivables 1,290 – – – 7,177 8
Cash and short-term deposits 549 1 – 6 2,849 –
Trade and other payables – – (63) – (17) –
1,839 1 (63) 6 10,009 8
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
33. FINANCIAL INSTRUMENTS (CONTINUED) (b) Financial risk management (Continued)
(ii) Foreign currency risk (Continued) Sensitivity analysis for foreign currency risk
The following table demonstrates the sensitivity to a reasonably possible change in the foreign currencies, with all other variables held constant on the Group’s and the Company’s total equity and profit for the financial year.
Group Company
2020 2019 2020 2019 Increase/ Increase/ Increase/ Increase/
(Decrease) (Decrease) (Decrease) (Decrease)
RM’000 RM’000 RM’000 RM’000
Effects on profit or loss and equity
Chinese Yuan:
- strengthened by 10% 3 184 3 184
- weakened by 10% (3) (184) (3) (184)
Euro Dollar:
- strengthened by 10% 40 75 15 6
- weakened by 10% (40) (75) (15) (6)
Japanese Yen:
- strengthened by 10% 1 1 1 1
- weakened by 10% (1) (1) (1) (1)
Singapore Dollar:
- strengthened by 10% 5 2 – –
- weakened by 10% (5) (2) – –
United States Dollar:
- strengthened by 10% 3,277 2,769 1,464 1,001
- weakened by 10% (3,277) (2,769) (1,464) (1,001)
Indonesian Rupiah:
- strengthened by 10% – 1 – 1
- weakened by 10% – (1) – (1)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
33. FINANCIAL INSTRUMENTS (CONTINUED) (b) Financial risk management (Continued)
(iii) Liquidity risk
Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations when they fall due. The Group’s and the Company’s exposure to liquidity risk arise primarily from mismatches of the maturities between financial assets and liabilities. The Group’s and the Company’s exposure to liquidity risk arise principally from trade and other payables, loans and borrowings.
The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by facilities. The Group and the Company maintain sufficient liquidity and available funds to meet daily cash needs, while maintaining controls and security over cash movements. The Group and the Company use a series of processes to obtain maximum benefits from its flow of funds, such that they are efficiently managed to maximise income from investment and minimise cost on borrowed funds. The Group’s and the Company’s finance department also ensure that there are sufficient unutilised stand-by facilities, funding and liquid assets available to meet both short-term and long-term funding requirements.
Maturity analysis
The following table sets out the maturity profile of the financial liabilities as at the end of the reporting period based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on the rates at the end of the reporting period):
Contractual cash flows On demand Between
Carrying or within 1 and After
amount 1 year 5 years 5 years Total