FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2024 121 NOTES TO THE FINANCIAL STATEMENTS (CONT’D) 28. FINANCIAL INSTRUMENTS (CONT’D) (a) Financial Risk Management Policies (Cont’d) Credit Risk (Cont’d) (iii) Assessment of impairment losses The Group has an informal credit policy in place and the exposure to credit risk is monitored on an ongoing basis through periodic review of the ageing of the receivables. The Group closely monitors the receivables’ nancial strength to reduce the risk of loss. At each reporting date, the Group evaluate whether any of the nancial assets at amortised cost are credit impaired. The gross carrying amount of nancial asset is written off against the associated impairment, if any, when there is no reasonable expectation of recovery despite the fact that they are still subject to enforcement activities. A nancial asset is credit impaired when any of following events that have a detrimental impact on the estimated future cash ows of the nancial asset have occurred: - Signi cant nancial dif culty of the receivable; - A breach of contract, such as a default or past due event; - Restructuring of a debt in relation to the receivable’s nancial dif culty; and - It is becoming probable that the receivable will enter bankruptcy or other nancial reorganisation. The Group considers a receivable to be in default when the receivable is unlikely to repay its debt to the Group in full or is more than 365 days past due unless the Group has reasonable and supportable information to demonstrate that a more a lagging default criterion is more appropriate. The Group uses a more lagging past due criterion for certain trade receivables when it is more appropriate to re ect their loss patterns. • Trade receivables The Group applies the simpli ed approach to measure expected credit losses using a lifetime expected credit loss allowance for all trade receivables. Inputs, Assumptions and Techniques used for Estimating Impairment Losses To measure the expected credit losses, trade receivables (including related parties) have been grouped based on shared credit risk characteristics and the days past due. The Group measures the expected credit losses of certain major customers, trade receivables that are credit impaired and trade receivables with a high risk of default on an individual basis. The expected loss rates are based on the payment pro les of sales over 60 months (2023: 60 months) before the reporting date and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to re ect current and forward-looking information on macroeconomic factors affecting the ability of the trade receivables to settle their debts using the linear regressive analysis. The Group has identi ed the Gross Domestic Product as the key macroeconomic factor of the forward-looking information. There are no signi cant changes in the estimation techniques and assumptions as compared to the previous nancial year.
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