FINANCIAL STATEMENTS
At 31 December 2020
Gross carrying amount 20,731 6,270 4,612 31,613
Company
At 31 December 2021
Gross carrying amount 7,830 2,800 2,551 13,181
At 31 December 2020
Gross carrying amount 4,816 4,400 3,518 12,734
The exposure of credit risk for trade receivables by geographical region is as follows:
Group Company
2021 2020 2021 2020
RM’000 RM’000 RM’000 RM’000
Australia – 197 – –
China 6,025 7,998 5,351 7,998
Europe 211 631 – –
Hong Kong – 166 – –
India 4,194 2,258 4,194 2,258
Japan 5,994 13,603 – –
Korea 2,001 1,141 2,001 1,141
Malaysia 3,403 3,564 479 643
United Arab Emirates 363 442 774 273
United State of America 775 854 – –
Others 613 759 382 421
23,579 31,613 13,181 12,734
NOTES TO THE FiNANCiAL STATEmENTS (CONTiNuEd)
32. 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 recognise 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 and borrowings granted to an associate. The amount related to the corporate guarantee provided by the Group are as follows:
Group
2021 2020
RM’000 RM’000
Corporate guarantee given to:
- Bank for banking facilities granted to subsidiaries 5,433 7,885 - Bank for borrowings granted to an associate 1,099 1,122 6,532 9,007
The Company monitors the results of the subsidiaries and their repayment on an on-going basis. The maximum exposure to credit risks amounts to RM6,531,901 (2020: RM9,007,477) representing the maximum amount the Group could pay if the guarantees are called.
The financial guarantees have not been recognised since the fair value on initial recognition was not material.
NOTES TO THE FiNANCiAL STATEmENTS (CONTiNuEd)
32. 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 Yuan Rupee Dollar Yen Dollar Dollar RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Group
2021
Trade and other receivables – – – – – 20,527
Cash and short-term deposits 30 1 – 9 – 8,780 Trade and other payables – – (606) – – (12,139)
30 1 (606) 9 – 17,168
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
NOTES TO THE FiNANCiAL STATEmENTS (CONTiNuEd)
32. 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 Yuan Rupee Dollar Yen Dollar RM’000 RM’000 RM’000 RM’000 RM’000 Company
2021
Trade and other receivables – – – – 13,140
Cash and short-term deposits 28 1 – 9 1,899
Trade and other payables – – (122) – (2,535)
28 1 (122) 9 12,504
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
NOTES TO THE FiNANCiAL STATEmENTS (CONTiNuEd)
32. 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
2021 2020 2021 2020
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% 2 2 2 2
- weakened by 10% (2) (2) (2) (2)
Euro Dollar:
- strengthened by 10% (46) (30) (9) (12)
- weakened by 10% 46 30 9 12
Japanese Yen:
- strengthened by 10% 1 1 1 1
- weakened by 10% (1) (1) (1) (1)
Singapore Dollar:
- strengthened by 10% – (4) – –
- weakened by 10% – 4 – –
United States Dollar:
- strengthened by 10% 1,288 2,490 950 1,112
- weakened by 10% (1,288) (2,490) (950) (1,112)
NOTES TO THE FiNANCiAL STATEmENTS (CONTiNuEd)
32. 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 maturity analysis of the Group’s and the Company’s financial liabilities by their relevant maturity at the reporting date based on contractual undiscounted repayment obligations are as follows:
Contractual cash flows On demand Between
Carrying or within 1 and After
amount 1 year 5 years 5 years Total