WASCO BERHAD 290 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2024 43 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) Credit risk (continued) (a) Receivables (continued) General 3-stage approach for other debt instruments financial assets (continued) The Group and the Company use three categories to reflect their credit risk and how the loss allowance is determined for each of those categories. A summary of the assumptions underpinning the Group’s and the Company’s ECL model is as follows: Category Group’s and Company’s definition of category Basis for recognising ECL Performing Debtors have a low risk of default and a strong capacity to meet contractual cash flows. 12 month ECL Underperforming Debtors for which there is a significant increase in credit risk or significant increase in credit risk is presumed if the forward-looking information and indicators available signify impairment to debtors’ ability to repay. Lifetime ECL Not performing Debtors’ ability to repay or likelihood of repayment is determined as fully impaired when it meets one of more of the credit-impaired indicators. Lifetime ECL (credit impaired) Based on the above, loss allowance is measured on either 12 month ECL or lifetime ECL, by considering the likelihood that the debtor would not be able to repay during the contractual period, the percentage of contractual cash flows that will not be collected if default happens and the outstanding amount that is exposed to default risk. No significant changes to estimation techniques or assumptions were made during the reporting period. There is no loss allowance for other financial asset at amortised cost as at 31 December 2024 and 31 December 2023, except for trade and other receivables, amounts owing by subsidiaries, amounts owing by associates and amounts owing by joint ventures. For movement of allowance for impairment of trade and other receivables, amounts owing by subsidiaries, amounts owing by associates and amounts owing by joint ventures, refer to Note 13, 14(a), 15 and 16(a) respectively. (b) Intercompany balances The Company provides unsecured loans and advances to subsidiaries. The Company monitors the results of its subsidiaries regularly. As at 31 December 2024 and 31 December 2023, the maximum exposure to credit risk is represented by their carrying amounts in the statement of financial position.
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