GHL System Berhad Annual Report 2020

139 a n n u a l r e p o r t 2 0 2 0 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 CONT’D 20. TRADE AND OTHER RECEIVABLES (cont’d) (i) Expected credit loss assessment (“ECL”) for financial institution customers are as follows: (cont’d) 31 December 2019 Gross carrying amount Impairment loss allowance Credit impairment RM RM Group Grades (Low risk) 20,764,949 (191,673) No Grades (Loss) 972,763 (972,763) Yes 21,737,712 (1,164,436) Company Grades (Low risk) 227,680 (1,138) No Grades (Loss) 220,515 (220,515) Yes 448,195 (221,653) (j) ECL assessment for non-financial institutions customers are as follows: The Group uses an allowance matrix to measure the expected credit loss of trade receivables from non- financial institutions customers. Expected loss rates are calculated using the roll rate method separately for exposures in different segments based on the following common credit risk characteristics - geographic region, age of customer relationship and type of product purchased. During this process, the probability of non-payment by the trade receivables is adjusted by forward looking information and multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such impairments are recorded in a separate impairment account with the loss being recognised within administrative expenses in the statements of profit or loss and other comprehensive income. On confirmation that the trade receivable would not be collectable, the gross carrying value of the asset would be written off against the associated impairment. It requires management to exercise significant judgement in determining the probability of default by trade receivables, appropriate forward looking information and estimated loss given default in worst-case scenarios incorporating the impact of the COVID-19 pandemic.