Dagang NeXchange Berhad Annual Report 2019

FINANCIAL STATEMENTS annual report 2019 171 30. FINANCIAL INSTRUMENTS (CONTINUED) 30.4 Credit risk Credit risk is the risk of a financial loss if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from the individual characteristics of each customer. The Company’s exposure to credit risk arises principally from loans and advances to subsidiaries and financial guarantees given to banks for credit facilities granted to subsidiaries. There are no significant changes as compared to prior periods. Receivables and contract assets Risk management objectives, policies and processes for managing the risk Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Normally financial guarantees given by banks, shareholders or directors of customers are obtained, and credit evaluations are performed on customers requiring credit over a certain amount. At each reporting date, the Group or the Company assesses whether any of the receivables and contract assets are credit impaired. The gross carrying amounts of credit impaired receivables and contract assets are written off (either partially or full) when there is no realistic prospect of recovery. This is generally the case when the Group or the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. Nevertheless, receivables and contract assets that are written off could still be subject to enforcement activities. 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 statement 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 2019 2018 RM’000 RM’000 Domestic 149,281 157,322 Singapore 135 4,343 China - 12,630 Indonesia 12,857 24,739 162,273 199,034