SCC Holdings Berhad Annual Report 2018

SCC Holdings Berhad | Annual Report 2018 .41 2. Basis of Preparation (cont’d) (a) Statement of compliance (cont’d) Adoption of new and amended standards (cont’d) (i) MFRS 9 Financial Instruments (IFRS 9 issued by IASB in July 2014) (cont’d) (a) Classification of financial assets MFRS 9 contains three principal classification categories for financial assets: measured at amortised cost (“AC”), fair value through other comprehensive income (“FVTOCI”) and fair value through profit or loss (“FVTPL”) and replaces the existing MFRS 139 Financial Instruments: Recognition and Measurement categories of loans and receivables, held-to-maturity and available-for-sale. Classification under MFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flows characteristics Investments in equity instruments are always measured at FVTPL with an irrevocable option at inception to present changes in OCI (provided the instruments is not held for trading). The Group changed the measurements of the investments in equity instruments previously held as available- for-sale to FVTOCI. (b) Classification of financial liabilities MFRS 9 largely retains the existing requirements in MFRS 139 for the classification of financial liabilities. There were no changes to the classification and measurements of financial liabilities to the Group and to the Company. (c) Impairment MFRS 9 requires impairment assessments to be based on an Expected Credit Loss (“ECL”) model, replacing the incurred loss model under MFRS 139. The Group and the Company require to record ECL on all of its loans and receivables, either on a 12-months or lifetime basis. The Group and the Company applied the simplified approach and record lifetime expected losses on all receivables. Based on readily information as at the date of this report, the Group and the Company have accounted for expected credit losses and changes in these expected credit losses of each reporting date to reflect changes in credit risk since initial recognition. (d) Effect of changes in classification of financial assets on 1 January 2018 As at Reclassification to MFRS 9 1.1.2018 AC FVTOCI RM’000 RM’000 RM’000 Group Financial assets Loans and receivables Trade receivables 15,402 15,402 - Other receivables 299 299 - Cash and bank balances 6,443 6,443 - Available-for-sale Investment securities 68 - 68 Company Financial assets Loans and receivables Other receivables 2 2 - Amounts due from subsidiary companies 6,267 6,267 - Cash and bank balances 895 895 - NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2018 (cont’d)