NOTES TO THE FINANCIAL STATEMENTS 35. FINANCIAL INSTRUMENTS (CONTINUED) 35.4 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 2025 RM’000 2024 RM’000 Asia 78,169 94,422 Europe 18,204 58,278 North America 9,390 10,241 105,763 162,941 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 pay within 180 days. A significant portion of trade receivables are regular customers that have been transacting with the Group. The Group adopts the simplified approach and uses an allowance matrix to measure expected credit losses (“ECLs”) of trade receivables and contract assets. To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics. 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. Consistent with the debt recovery process, invoices which are past due 180 days will be considered as credit impaired. Loss rates are based on actual credit loss experience over the past two 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. The Group and the Company apply the 3-stage general approach to measuring expected credit losses for its other receivables and non-trade amount due from related parties. 203 OPERATIONAL REVIEW SUSTAINABILITY STATEMENT GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDERS’ INFORMATION INTELLIGENCE POWERING
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