My EG Services Berhad Annual Report 2020

ANNUAL REPORT 2020 219 FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS For The Financial Year Ended 31 December 2020 (CONT’D) 47. FINANCIAL INSTRUMENTS (CONT’D) 47.1 FINANCIAL RISK MANAGEMENT POLICIES (cont’d) (b) Credit Risk (cont’d) (iii) Assessment of Impairment Losses (cont’d) Amount Owing By Associates (cont’d) The information about the exposure to credit risk and the loss allowances calculated under MFRS 9 for amount owing by associates are summarised as below:- (cont’d) Gross Amount Lifetime Loss Allowance Carrying Amount The Company RM’000 RM’000 RM’000 2020 Low credit risk # - # Credit Impaired 72,555 (72,555) - 72,555 (72,555) # 2019 Credit Impaired 72,750 (72,750) - # The amount is less than RM1,000 Fixed Deposits with Licensed Banks, Cash and Bank Balances The Group considers these banks and financial institutions to have low credit risks. In addition, some of the bank balances are insured by Government agencies. Therefore, the Group is of the view that the loss allowance is immaterial and hence, it is not provided for. Amount Owing By Subsidiaries (Non-trade Balances) The Company applies the 3-stage general approach to measuring expected credit losses for all inter-company balances. Generally, the Company considers loans and advances to subsidiaries have low credit risks. 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 loan or advance in full or the subsidiary is continuously loss making or the subsidiary is having a deficit in its total equity. The Company determines the probability of default for these loans and advances individually using internal information available. Financial Guarantee Contracts All of the financial guarantee contracts are considered to be performing, have low risks of default and historically there were no instances where these financial guarantee contracts were called upon by the parties of which the financial guarantee contracts were issued to. Accordingly, no loss allowances were identified based on 12-month expected credit losses.