Chemical Company of Malaysia Berhad Annual Report 2019

25. Financial instruments (continued) 25.4Credit risk (continued) (iii) Other receivables Credit risks on other receivables are mainly arising from deposits paid for office buildings rented. These deposits will be received at the end of each lease terms. The Group manages the credit risk together with the leasing arrangement. As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the statement of financial position. As at the end of the reporting period, the Group and the Company recognised impairment loss of RM148,000 on other receivables which are long outstanding, and deemed not recoverable. (iv) Inter-company loans and advances Risk management objectives, policies and processes for managing the risk The Group and the Company provide unsecured loans and advances to subsidiaries, related companies and an associate. The Group and the Company monitor the ability of the subsidiaries, related companies and an associate to repay the loans and advances on an individual basis. Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the statement of financial position. Loans and advances provided are not secured by any collateral or supported by any other credit enhancements. Recognition and measurement of impairment losses Generally, the Group and the Company consider loans and advances to subsidiaries, related companies and an associate have low credit risk. The Group and the Company assume that there is a significant increase in credit risk when a subsidiary’s, a related company’s or an associate’s financial position deteriorates significantly. As the Group and the Company are able to determine the timing of payments of the subsidiaries’, related companies’ and an associate’s loans and advances when they are payable, the Group and the Company consider the loans and advances to be in default when the subsidiaries, related companies and an associate are not able to pay when demanded. The Group and the Company consider a subsidiary’s, a related company’s and an associate’s loans or advances to be credit impaired when: • The subsidiary, related company and associate are unlikely to repay their loan or advance to the Group and the Company in full; or • The subsidiary, related company and associate are continuously loss making and are having a deficit shareholders’ fund.   | Notes to the Financial Statements (continued) | 192 CHEMICAL COMPANY OF MALAYSIA BERHAD