GHL System Berhad Annual Report 2020

138 G H L S y s t e m S B e r h a d 1 9 9 4 0 1 0 0 7 3 6 1 ( 2 9 3 0 4 0 - D ) NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 CONT’D 20. TRADE AND OTHER RECEIVABLES (cont’d) (b) Trade receivables (other than loan, advances and financing to customers and lease receivables) are non- interest bearing and the normal trade credit terms granted by the Group and the Company ranges from 30 to 180 days (2019: 30 to 180 days). They are recognised at their original invoice amounts which represent their fair values on initial recognition. (c) Loan, advances and financing to customers are loans granted to Merchants which are recoverable through instalment repayments via monthly settlement of payment owing to Merchant and subject to an interest ranging at 6% to 15% per annum. Loans granted to Merchants usually has a tenure between twelve (12) to twenty-four (24) months. (d) Lease receivables are recoverable through instalment repayments via monthly settlement by customers and subject to an interest of 4.33% per annum. The tenure of this agreement is three (3) years. (e) Non-trade amounts owing by subsidiaries are unsecured, payable in cash and cash equivalents within next twelve (12) months and interest-free. (f) Included in other receivables of the Group is an amount of RM52,077,425 (2019: RM28,651,518) being the Payment Holding Account with Payment Network Malaysia Sdn. Bhd. (“PAYNET”), which was pending for settlement payment owing to Merchant. (g) Contract assets represent the timing differences in revenue recognition and the milestone billings. The milestone billings are structured and/or negotiated with customers to reflect physical completion of the contracts. Contract assets are transferred to receivables when the rights to economic benefits become unconditional. This usually occurs when the Group issues billing to the customer. There were no significant changes in the contract assets during the financial year. (h) Impairment for trade receivables that do not contain a significant financing component are recognised based on the simplified approach using the lifetime expected credit losses. (i) Expected credit loss assessment (“ECL”) for financial institution customers are as follows: The Group allocates each exposure to a credit risk grade based on data that is determined to be predictive of the risk of loss and applying experience credit judgement. Credit risk grades are defined using qualitative and quantitative factors that are indicative of the risk of default and are aligned to external credit rating definitions from the agency, Bloomberg. The following table provides information about the exposure to credit risk and ECLs for trade receivables for financial institutions customers. 31 December 2020 Gross carrying amount Impairment loss allowance Credit impairment RM RM Group Grades (Low risk) 23,836,531 (82,580) No Grades (Loss) 251,024 (251,024) Yes 24,087,555 (333,604) Company Grades (Low risk) 307,162 (1,536) No Grades (Loss) 148,570 (148,570) Yes 455,732 (150,106)