Sasbadi Annual Report 2019

PAGE 123 ANNUAL REPORT 2019 FINANCIAL STATEMENTS (continued) 23. Financial instruments (continued) 23.4 Credit risk (continued) Receivables Risk management objectives, policies and processes for managing the risk Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on customers requiring credit over a certain amount. At each reporting date, the Group or the Company assesses whether any of the trade receivables and contract assets are credit impaired. The gross carrying amounts of credit impaired trade receivables are written off (either partially or full) when there is no realistic prospect of recovery. This is generally the case when the Group or the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. Nevertheless, trade receivables that are written off could still be subject to enforcement activities. There are no significant changes as compared to previous year. Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented by the carrying amounts in the statements of financial position. As at 31 August 2019, the Group has significant concentration of credit risk in the form of outstanding balances from 5 trade customers which amounted to RM10,718,000 (2018: RM10,617,000) representing 24% (2018: 22%) of total trade receivables. The Directors are of the opinion that the outstanding balances from these customers are fully recoverable based on the following: x Significant payments have subsequently been received from 5 customers after the reporting period; and x The Directors have made assessments that all these customers have the ability to repay the balances outstanding. The Group has entered into a small number of contracts, all of which are monitored individually for completion and payment by the Directors and management. The Directors are confident that, based on their knowledge of payment patterns and subsequent payments received, the Group is able to fully recover the amounts due from its customers. Where applicable, the Group will demand for guarantees from shareholders/ Directors of their customers as a form of safeguard over the outstanding debts.