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312 MSM MALAYSIA HOLDINGS BERHAD WHO WE ARE STATEMENT & DISCUSSION BY OUR LEADERS HOW WE OPERATE
ANNUAL INTEGRATED REPORT 2021

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021

4 FINANCIAL RISK MANAGEMENT (CONTINUED)
(a) Financial risk management policies (continued)

Credit risk (continued)
(a) Impairment of financial assets (continued)
(ii) Other receivables, loans and amounts due from immediate holding company, subsidiaries and other related
companies that are non-trade related using general 3-stage approach

The Group uses three categories for other receivables which reflect their credit risk and how the loss
allowance is determined for each of those categories (3 stage approach). These financial assets are written
off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation
of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the group,
and a failure to make contractual payments for a period of greater than 365 days past due.
A summary of the assumptions underpinning the Group’s ECL model is as follows:

Category Group’s definition of category Basis for recognising ECL
Performing Debtors have a low risk of default and a strong 12 month ECL
capacity to meet contractual cash flows
Underperforming Debtors for which there is a significant increase Lifetime ECL
in credit risk or significant increase in credit risk is
presumed if interest and/or principal repayments
are 30 days past due

Non-performing Interest and/or principal repayments are Lifetime ECL (credit-impaired)
180 days past due or there is evidence indicating
the asset is credit-impaired
Write-off There is evidence indicating that there is no Asset is written off
reasonable expectation of recovery based on
unavailability of debtor’s sources of income or
assets to generate sufficient future cash flows
to repay the amount

Fixed deposits and bank balances
The Group seeks to invest in its cash assets safely by depositing them with licensed financial institutions.
The Group’s bank and cash balances were largely placed with major financial institutions in Malaysia. The Directors
are of the view that the possibility of non-performance by these financial institutions, including those non-rated financial
institutions, is remote on the basis of their financial strength.
Inter-company balances

The Company provided unsecured loans to subsidiaries. The Company monitors the results of the subsidiaries regularly.
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 and there was no indication that the loans to the subsidiaries are not recoverable.