ENRA Group Berhad | Annual Report 2022 130 NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2022 11. TRADE AND OTHER RECEIVABLES (CONT’D) (j) Impairment for other receivables and amount due from subsidiaries are recognised based on the general approach within MFRS 9 using the forward looking expected credit loss model. The methodology used to determine the amount of the impairment is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. At the end of the reporting period, the Group assessed whether there has been a significant increase in credit risk for financial assets by comparing the risk of default since initial recognition. For those in which the credit risk has not increased significantly since initial recognition of the financial asset, twelve-months expected credit losses along with gross interest income are recognised. For those in which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised. The Group defined significant increase in credit risk based on changes to contractual terms, payment delays and past due information. Generally, the Company considers loans and advances to subsidiaries have low credit risk. The Company assumes that there is a significant increase in credit risk when a subsidiary’s financial position deteriorates significantly. As the Company is able to determine the timing of payments of the subsidiaries’ loans and advances when they are payable, the Company considers the loans and advances to be in default when the subsidiaries are not able to pay when demanded. The Company considers a subsidiary’s loan or advance to be credit impaired when: - The subsidiary is unlikely to repay its loans or advances to the Company in full; - The subsidiary’s loan or advance is overdue for more than 120 days; or - The subsidiary is continuously loss making and is having a deficit shareholders’ fund. The Company determines the probability of default for these intercompany loans and advances using internal information available. It requires management to exercise its judgement in determining the probabilities of default by other receivables and subsidiaries, appropriate forward-looking information (gross domestic product (GDP)) and significant increase in credit risk, including the effects of COVID-19 pandemic. No expected credit loss is recognised arising from other receivables and amounts owing by subsidiaries as it is negligible. Movements in the impairment allowance for other receivables and deposits are as follows: Lifetime ECL 12-month - not credit Group ECL impaired Total RM’000 RM’000 RM’000 At 1 April 2020 2,241 – 2,241 Written off during the year (2,241) – (2,241) At 31 March 2021/1 April 2021 – – – (k) Information on financial risks of trade and other receivables is disclosed in Note 37 to the financial statements.
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