KUB Malaysia Berhad Annual Report 2021

17. LEASES (cont’d) (ii) As lessor (cont’d) Finance lease receivables (cont’d) 30.6.2021 31.12.2019 RM’000 RM’000 Undiscounted lease receivables analysed as: Recoverable within 12 months 452 420 Recoverable after 12 months 977 1,508 1,429 1,928 Net investment in the lease analysed as: Recoverable within 12 months 164 115 Recoverable after 12 months 1,145 1,577 1,309 1,692 The following table presents the movements in the net investment in lease receivables: Group 30.6.2021 31.12.2019 RM’000 RM’000 As at 1 January 1,692 - Reclassifications from property, plant and equipment (Note 15) - 1,182 Additions during the period/year 90 550 Finance lease income recognised (Note 5) 471 131 Repayments of finance lease receivables (659) (171) Reduction in unguaranteed residual value (Note 9) (285) - As at 30 June/31 December 1,309 1,692 The Group entered into a business arrangement for the supply of liquefied petroleum gas (‘LPG’) via bulk tank system with the average term of 5 years. The LPG is to be delivered and stored in the bulk tank system located at customers’ location. The Group has classified this as part of finance lease considering that physical access to the bulk tank system is controlled by the customer. Generally, these lease contracts do not include extension or early termination options. During the financial period ended 30 June 2021, the Group recognised finance lease income from the lease receivables of RM471,000 (31.12.2019: RM131,000) as part of the Group’s revenue as disclosed in Note 5. The Group estimates the loss allowance on finance lease receivables at the end of the reporting period at an amount equal to lifetime ECL. None of the finance lease receivables at the end of the reporting period is past due and taking into account the historical default experience and the future prospects of the industries in which the lessees operate. There has been no change in the estimation techniques or significant assumptions made during the current reporting period in assessing the loss allowance for finance lease receivables. Operating lease The Group has entered into commercial property leases on its properties. The Group has classified these leases as operating leases, because they do not transfer substantially all of the risks and rewards incidental to the ownership of the assets. These leases have an average tenure of between one and three years. NOTES TO THE FINANCIAL STATEMENTS 104 KUB MALAYSIA BERHAD