FGV HOLDINGS BERHAD | AUDITED FINANCIAL STATEMENTS 2023 69 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023 4 FINANCIAL RISK MANAGEMENT (CONTINUED) (a) Financial risk management policies (continued) Credit risk (continued) (i) Impairment of financial assets (continued) b) Other receivables, loans due from intercompany and non-trade amounts due from intercompany using general 3-stage approach (continued) Based on the above, loss allowance is measured on either 12 months ECL or lifetime ECL incorporating the methodology below: • PD (‘probability of default’) – the likelihood that the debtor would not be able to repay during the contractual period; • LGD (‘loss given default’) – the percentage of contractual cash flows that will not be collected if default happens; and • EAD (‘exposure at default’) – the outstanding amount that is exposed to default risk. Loss allowance is measured at a probability-weighted amount that reflects the possibility that a credit loss occurs and the possibility that no credit loss occurs. No significant changes to estimation techniques or assumptions were made during the reporting period. Impairment losses on financial assets are presented as net impairment losses within operating profit. Subsequent recoveries of amounts previously written off of financial assets are credited against the same line item. (ii) Credit risk exposures The maximum credit risk exposures for the financial assets equal to their respective carrying values after ECL. The details of ECL impact to the financial assets are disclosed in the respective financial assets’ notes as applicable. Liquidity risk Liquidity risk is the risk that the Group will encounter difficulties in meeting obligations due to shortage of funds. The Group maintains a sufficient level of cash and cash equivalents to meet the Group’s working capital requirements by closely monitoring its cash flows. Due to the nature of its business, the Group has adopted prudent liquidity risk management in maintaining and obtaining sufficient credit facilities from financial institutions. In addition to the Group’s obligations, the Group has also confirmed its intention to provide continuing financial support to its subsidiary, MSM Malaysia Holdings Berhad, which is a separate public listed entity listed on the Main Market of Bursa Malaysia Securities Berhad. The financial support was provided as and when necessary to enable the subsidiary, MSM Malaysia Holdings Berhad to meet its liabilities as they fall due. The financial support given to the subsidiary, MSM Malaysia Holdings Berhad covers a period of twelve months from the date of the support letter, 25 March 2024.
RkJQdWJsaXNoZXIy NDgzMzc=