NOTES TO THE FINANCIAL STATEMENTS Cont’d 29. Financial instruments cont’d 29.4 Credit risk cont’d Trade receivables and contract assets cont’d Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk arising from trade receivables and contract assets are represented by the carrying amounts in the statement of financial position. The Group does not normally receive financial guarantees given by banks, shareholders or directors of customers as the Group transacts with a small pool of customers which have been dealing with the Group for a long period of time. Nevertheless, the Directors use ageing analysis to monitor the credit quality of the receivables in managing exposure to credit risks. Concentration of credit risk The exposure of credit risk for non-related party trade receivables and contract assets as at the end of the reporting period by geographic region was: Group 2022 2021 RM’000 RM’000 Domestic 181,017 198,608 Asia 1,016,377 778,791 Oceania 70,684 46,230 Europe 269,192 360,112 America 15,211 21,530 1,552,481 1,405,271 Recognition and measurement of impairment loss In managing credit risk of trade receivables, the Group manages its debtors and takes appropriate actions (including but not limited to legal actions) to recover long overdue balances. Generally, trade receivables will pay within 180 days. The Group’s debt recovery process is as follows: a) Above 90 days past due after credit term, the Group will start to initiate a structured debt recovery process which is monitored by the sales management team; and b) The Group will commence a legal proceeding against the customer who fails to pay after the Group initiates the debt recovery process. As the Group does not deal with a large pool of customers, the Group assessed the risk of loss of each customer individually based on their financial information, past trend of payments and external credit ratings, where applicable. All of these customers have low risk of default, except for those which have been credit impaired. PRESS METAL ALUMINIUM HOLDINGS BERHAD 283
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