My EG Services Berhad Annual Report 2021

MY E.G. SERVICES BERHAD Registration No. 200001003034 (505639-K) 238 NOTES TO THE FINANCIAL STATEMENTS ʹˢ˥ ˧˛˘ Ѓˡ˔ˡ˖˜˔˟ ˬ˘˔˥ ˘ˡ˗˘˗ ʦʤ ʷ˘˖˘ˠ˕˘˥ ʥʣʥʤ (CONT’D) 48. FINANCIAL INSTRUMENTS (CONT’D) 48.1 FINANCIAL RISK MANAGEMENT POLICIES (cont’d) (b) Credit Risk (cont’d) (iii) Assessment of Impairment Losses (cont’d) The Company The Company believes that no impairment allowance is necessary in respect of its trade receivables. Other Receivables The Group applies the 3-stage general approach to measuring expected credit losses for its other receivables. Inputs, Assumptions and Techniques used for Estimating Impairment Losses Under this approach, the Group assesses whether there is a significant increase in credit risk on the receivables by comparing their risk of default as at the reporting date with the risk of default as at the date of initial recognition based on available reasonable and supportable forwardlooking information. The Group uses 3 categories to reflect their credit risk and how the loss allowance is determined for each category:- Category Definition of Category Loss Allowance Performing: Receivables have a low risk of default and a strong capacity to meet contractual cash flows 12-months expected credit losses Underperforming: Receivables for which there is a significant increase in credit risk Lifetime expected credit losses Not performing: There is evidence indicating the receivable is credit impaired. Lifetime expected credit losses The Group considers a receivable is credit impaired when the receivable is in significant financial difficulty, for instances, the receivable is in breach of financial covenants or insolvent. Receivables that are credit impaired are assessed individually while other receivables are assessed on a collective basis. Based on the assessment performed, the identified impairment loss was immaterial and hence, it is not provided for. Amount Owing By Joint Ventures (Non-trade balances) The Group applies the 3-stage general approach to measuring expected credit losses for its amount owing by joint ventures and amount owing by related parties. Under this approach, loss allowance is measured on either 12-month expected credit losses or lifetime expected credit losses, by considering the likelihood that the receivable would not be able to repay during the contractual period (probability of default, PD), the percentage of contractual cash flows that will not be collected if default happens (loss given default, LGD) and the outstanding amount that is exposed to default risk (exposure at default, EAD).

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