Dagang NeXchange Berhad Annual Report 2018

30. FINANCIAL INSTRUMENTS (CONTINUED) 30.4 Credit risk (continued) Inter-company balances Risk management objectives, policies and processes for managing the risk The Company provides unsecured loans and advances to subsidiaries. The Company monitors the ability of the subsidiaries to repay the loans and advances on an individual basis. 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 loss 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 advances to be credit impaired when the subsidiary is unlikely to repay its loan or advances 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 as at 31 December 2018. 2018 Gross- Impairment carrying loss Net amount allowances balances RM’000 RM’000 RM’000 Company Low credit risk 79,118 (6,667) 72,451 Significant increase in credit risk - - - Credit impaired - - - 79,118 (6,667) 72,451 167 Annual Report 2018 Notes to the Financial Statements (CONTINUED) FINANCIAL STATEMENTS