2018 UEM Edgenta Annual Report

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D.) 2.2 First time adoption of Malaysian Financial Reporting Standards (“MFRS”) (cont’d.) MFRS 9 Financial instruments (cont’d.) Classification and measurement (cont’d.) In summary, upon the adoption of MFRS 9, the Group had the following required or elected reclassifications: MFRS 9 measurement category Amortised cost FVTPL FRS 139 measurement category RM’000 RM’000 RM’000 As at 31 December 2017 FVTPL 183,425 – 183,425 Loans and receivables 1,359,810 1,359,810 – 1,543,235 1,359,810 183,425 As at 1 January 2017 FVTPL 42,866 – 42,866 Loans and receivables 1,644,046 1,644,046 – 1,686,912 1,644,046 42,866 The changes in classification above have had no material impact on the Group’s financial position or performance. There are no changes in classification and measurement of the Group’s financial liabilities. Impairment MFRS 9 introduces expected credit losses (“ECL”) model on impairment that replaces the incurred loss impairment model as used in FRS 139. The ECL model requires impairment to be recognised on initial recognition including expected future credit losses whilst the incurred loss impairment model only requires recognition of credit losses incurred as at reporting date. The impairment requirements apply to financial assets measured at amortised cost and FVOCI, lease receivables and certain loan commitments as well as financial guarantee contracts, which include loans, advances and financing and investment securities. Allowance for impairment are made based on a three-stage approach which reflects the change in credit quality of the financial instrument since initial recognition. The Group has applied the simplified approach and record lifetime expected losses on all trade receivables. The Group has assessed that the impact from the initial application of this standard is not material. Hedge accounting Under MFRS 9, the general hedge accounting requirements have been simplified for hedge effectiveness testing and permit hedge accounting to be applied to a greater variety of hedging instruments and risks. The adoption of this standard has had no material impact to the Group’s financial statements in this regard. Financial Review Stakeholder Information AGM Information 159 Governance Review of Sustainability Activities