Dagang NeXchange Berhad Annual Report 2019

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) DAGANG NeXCHANGE BERHAD 174 30. FINANCIAL INSTRUMENTS (CONTINUED) 30.4 Credit risk (continued) Inter-company balances (continued) 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 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. Gross- Impairment loss Net carrying amount allowances balances Company RM’000 RM’000 RM’000 2019 Low credit risk 59,301 (6,373) 52,928 Significant increase in credit risk - - - Credit impaired - - - 59,301 (6,373) 52,928 2018 Low credit risk 79,118 (6,667) 72,451 Significant increase in credit risk - - - Credit impaired - - - 79,118 (6,667) 72,451 The movement in the allowance for impairment in respect of subsidiaries’ loans and advances during the year are as follows: Lifetime ECL Company RM’000 Balance at 1 January 2018 17,543 Reversal of impairment losses (10,876) Balance at 31 December 2018/1 January 2019 6,667 Reversal of impairment losses (294) Balance at 31 December 2019 6,373