EXCEL FORCE MSC BERHAD Annual Report 2018

57 ANNUAL REPORT 2018 2. Basis of Preparation (cont’d) (a) Statement of compliance (cont’d) Adoption of new and amended standards (cont’d) The adoption of the new standards and amendments to standards did not have any significant impact on the financial statements of the Group and of the Company, except for: (i) MFRS 9 Financial Instruments (IFRS 9 issued by IASB in July 2014) The adoption of MFRS 9 resulted in changes in accounting policies and adjustments to the financial statements. The accounting policies that relate to the recognition, classification, measurement and derecognition of financial instruments and impairment of financial assets are amended to comply with the provisions of this Standard, while the hedge accounting requirements under this Standard are not relevant to the Group and to the Company. The Group and the Company applied MFRS 9 retrospectively, and have elected not to restate the comparative periods in the financial year of initial adoption as permitted under MFRS 9 transitional provision which continue to be reported under MFRS 139. The impact arising from MFRS 9 adoption were included in the opening retained earnings at the date of initial application, 1 January 2018. (1) Classification of financial assets and liabilities Financial assets MFRS 9 contains three (3) principal classification categories for financial assets: (i) measured at amortised cost (“AC”); (ii) fair value through other comprehensive income (“FVTOCI”); and (iii) fair value through profit or loss (“FVTPL”). The standard replaces the existing MFRS 139 Financial Instruments: Recognition and Measurement categories of loans and receivables, held-to-maturity and available-for-sale. Classification under MFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flows characteristics. Financial liabilities MFRS 9 largely retains the existing requirements in MFRS 139 for the classification of financial liabilities. There were no changes to the classification and measurements of financial liabilities to the Group and to the Company. (2) Impairment MFRS 9 requires impairment assessments to be based on an Expected Credit Loss (“ECL”) model, replacing the incurred loss model under MFRS 139. The Group and the Company require to record ECL on all of its debt instruments, loans and receivables, either on a 12-months or lifetime basis. The Group and the Company applied the simplified approach and record lifetime expected losses on all receivables. Based on readily information as at the date of this report, the Group and the Company do not expect any significant increase in impairment losses. Notes To The Financial Statements 31 December 2018 (cont’d)