NOTES TO THE FINANCIAL STATEMENTS 35. FINANCIAL INSTRUMENTS (CONTINUED) 35.4 Credit risk (continued) Inter-company balances (continued) Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the statement of financial position. Recognition and measurement of impairment losses The Company applies the 3-stage general approach to measure expected credit losses for all inter-company balances. The Company measures the expected credit losses on individual basis, which is aligned with its credit risk management practices on the inter-company balances. Generally, the Company considers loans and advances to subsidiaries have low credit risk. 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 to the Company in full. The Company determines the probability of default for these loans and advances individually using internal information available. The following table provides information about the exposure to credit risk and ECLs for subsidiaries’ loans and advances. Company Gross carrying amount RM’000 Loss allowances RM’000 Net balances RM’000 2025 Low credit risk 858,396 - 858,396 Significant increase in credit risk 2,924 (1,480) 1,444 Credit impaired 21,600 (21,600) - 882,920 (23,080) 859,840 2024 Low credit risk 793,868 - 793,868 Significant increase in credit risk 9,758 (7,297) 2,461 Credit impaired 90,195 (90,195) - 893,821 (97,492) 796,329 207 OPERATIONAL REVIEW SUSTAINABILITY STATEMENT GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDERS’ INFORMATION INTELLIGENCE POWERING
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