GHL System Berhad Annual Report 2017

ANNUAL REPORT 2017 123 NOTES TO THE FINANCIAL STATEMENTS 31 December 2017 CONT’D 27. CONTINGENT LIABILITIES Group Company 2017 2016 2017 2016 RM RM RM RM Unsecured Corporate guarantee given to banks for credit facilities granted to subsidiaries - - 88,950,000 88,950,000 Guarantees given to a third party in respect of trade and contract 27,041,167 23,140,959 3,246,950 3,246,950 27,041,167 23,140,959 92,196,950 92,196,950 The Group designates corporate guarantees given to banks for credit facilities granted to subsidiaries as insurance contracts as defined in MFRS 4 Insurance Contracts . The Group recognises these insurance contracts as recognised insurance liabilities when there is a present obligation, legal or constructive, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits would be required to settle the obligation and reliable estimate can be made of the amount of the obligation. At the end of the reporting period, the Group assesses whether its recognised insurance liabilities are adequate, using current estimates of future cash flows under its insurance contracts. If this assessment shows that the carrying amount of the insurance liabilities is inadequate, the entire deficiency shall be recognised in profit or loss. Recognised insurance liabilities are only removed from the statement of financial position when, and only when, it is extinguished via a discharge, cancellation or expiration. The Directors are of the view that the chances of the financial institutions to call upon the corporate guarantees are remote. 28. COMMITMENTS (a) Operating lease commitments (i) The Group as a lessee The Group had entered into lease agreements for premises. Group 2017 2016 RM RM Not later than one (1) year 1,089,151 1,016,526 Later than one (1) year and not later than five (5) years 2,102,735 2,318,495 More than five (5) years 1,400 90,000 3,193,286 3,425,021