34. FINANCIAL INSTRUMENTS (CONTINUED) 34.4 Credit risk (continued) Receivables and contract assets (continued) Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk arising from receivables and contract assets are represented by the carrying amounts in the statements of financial position. Concentration of credit risk The exposure of credit risk for receivables and contract assets (excluding prepayments) as at the end of the reporting period by geographical region was: Group 30.6.2022 RM’000 30.6.2021 RM’000 Asia 269,374 107,936 Europe 8,744 8,630 North America 3,434 – 281,552 116,566 Recognition and measurement of impairment losses In managing credit risk of trade receivables, the Group manages its debtors and takes appropriate actions (including but not limited to legal actions) to recover long overdue balances. Generally, the trade receivables will be paid within 180 days. A significant portion of trade receivables are regular customers that have been transacting with the Group. The Group uses an allowance matrix to measure expected credit losses (“ECLs”) of trade receivables. Consistent with the debt recovery process, invoices which are past due 180 days will be considered as credit impaired. Loss rates are calculated using a ‘roll rate’ method based on the probability of a receivable progressing through successive stages of delinquency to 180 days past due. Loss rates are based on actual credit loss experience over the past three years. The Group also considers differences between (a) economic conditions during the period over which the historic data has been collected, (b) current conditions and (c) the Group’s view of economic conditions over the expected lives of the receivables. Nevertheless, the Group believes that these factors are immaterial for the purpose of impairment calculation for the year. 291 DNeX INTEGRATED REPORT 2022
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