Sasbadi Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS 124 SASBADI HOLDINGS BERHAD (1022660-T) I BER AD (10 2 60-T) 23. Financial instruments (continued) 23.4 Credit risk (continued) Receivables (continued) Impairment losses (continued) The movements in the allowance for impairment losses of trade receivables during the financial year were: Group 2017 2016 RM’000 RM’000 At 1 September 736 475 Acquisitions through business combinations - 288 Impairment loss recognised 1,149 - Impairment loss reversed (62) (27) Impairment loss written off (126) - At 31 August 1,697 736 The allowance account in respect of trade receivables is used to record impairment losses. Unless the Group is satisfied that recovery of the amount is possible, the amount considered irrecoverable is written off against the receivable directly. Financial guarantees Risk management objectives, policies and processes for managing the risk The Group provides unsecured financial guarantees to banks in respect of banking facilities granted to certain subsidiaries. The Group monitors on an ongoing basis the results of the subsidiaries and repayments made by the subsidiaries. Exposure to credit risk, credit quality and collateral The maximum exposure to credit risk amounts to RM36,566,000 (2016: RM19,788,000) representing the outstanding term loan, bankers acceptance and bank overdrafts of the subsidiaries as at the end of the reporting period. As at the end of the reporting period, there was no indication that any subsidiary would default on repayment. The financial guarantees have not been recognised since the fair value on initial recognition was not material. Investments and other financial assets Risk management objectives, policies and processes for managing the risk Investments are allowed only in liquid securities and only with counterparties that have a credit rating equal to or better than the Group. Transactions involving derivative financial instruments, if any, are with approved financial institutions.