41. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) (a) Credit risk (contd.) Trade receivables and contract assets (contd.) The Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments in calculating ECLs for trade receivables and contract assets. The amount and timing of future cash flows are then estimated based on historical credit loss experience for assets with similar credit risk characteristics and adjusted with forward-looking information such as forecast economic conditions. The measurement of ECL take into accounts reasonable and supportable information that is available without undue cost or effort. This includes information about past events, current conditions and forward-looking factors specific to the debtors. Exposure to credit risk The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 40. The Group does not hold collateral as security. Credit risk concentration profile The Group determines concentrations of credit risk by monitoring the country sector profile of its trade receivables on an ongoing basis. The credit risk concentration profile of the Group’s net trade receivables at the reporting date are as follows: 2022 2021 RM’000 % of total RM’000 % of total By country: Malaysia 240,938 59 268,859 61 United Arab Emirates 19,168 5 18,304 4 Indonesia – – 4,948 1 Singapore 58,902 14 66,691 15 Taiwan 88,320 22 82,035 19 407,328 100 440,837 100 At the reporting date, the Group’s ten largest customers account for approximately 37% (2021: 34%) of total trade receivables. Majority of these customers are government, quasi-government agency and government linked organisations. Financial assets that are either past due or impaired Information regarding financial assets that are either past due or impaired is disclosed in Note 22. 41. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) (b) Liquidity risk Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities. The Group manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities at a reasonable level to its overall debt position. As far as possible, the Group raises committed funding from both capital markets and financial institutions and balances its portfolio with some short-term funding so as to achieve overall cost effectiveness. Analysis of financial instruments by remaining contractual maturities The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations. Group On demand or within one year RM’000 One to five years RM’000 More than five years RM’000 Total RM’000 2022 Financial liabilities: Trade and other payables 665,385 10,776 – 676,161 Lease liabilities 13,708 29,115 – 42,823 Loans and borrowings: – IMTNs – 296,970 – 296,970 – Revolving credit 101,732 – – 101,732 – Term loans 27,845 88,325 – 116,170 Total undiscounted financial liabilities 808,670 425,186 – 1,233,856 2021 Financial liabilities: Trade and other payables 727,740 10,765 – 738,505 Lease liabilities 9,342 26,603 170 36,115 Loans and borrowings: – IMTNs 252,184 – – 252,184 – Revolving credit 119,948 – – 119,948 – Term loans 13,294 51,922 12,434 77,650 Total undiscounted financial liabilities 1,122,508 89,290 12,604 1,224,402 p.358 p.359 UEM EDGENTA BERHAD INTEGRATED ANNUAL REPORT 2022 1 2 3 4 5 6 7 8 9 FINANCIAL STATEMENTS Notes to the financial statements For the year ended 31 December 2022 Notes to the financial statements For the year ended 31 December 2022
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