Group Overview Operation and Financial Review Financials Other Information Sustainability and Governance Indofood Agri Resources Ltd. 150 Notes to the financial statements For the financial year ended 31 December 2025 35. Financial risk management objectives and policies (cont’d) (d) Credit risk (cont’d) Trade receivables The Group has policies in place to ensure that sales of products are made only to creditworthy customers with proven track record or good credit history. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. For export sales, the Group requires cash against the presentation of documents of title. For domestic sales, the Group may grant its customers credit terms from 1 to 35 days from the issuance of invoice. The Group has policies that the limit amount of credit exposure to any particular customer, such as, requiring sub-distributors to provide bank guarantees. In addition, receivable balances are monitored on an ongoing basis to reduce the Group’s exposure to bad debts. When a customer fails to make payment within the credit terms granted, the Group will contact the customer to act on the overdue receivables. If the customer does not settle the overdue receivable within a reasonable time, the Group will proceed to commence legal proceedings. Depending on the Group’s assessment, specific allowances may be made if the debt is deemed uncollectible. To mitigate credit risk, the Group will cease the supply of all products to customers in the event of late payment and/or default. An impairment analysis is performed at each reporting date using a provision matrix to measure ECL. The provision rates are based on days past due for groupings of various customer segments with similar loss patterns (i.e., customer type, payment terms and due date). The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Notes 22 and 24. The Group evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in dispersed locations and industries. Plasma Receivables As disclosed in Notes 2.9 and 32(a), plasma receivables represent costs incurred for plasma plantation development which include costs for plasma plantations funded by the banks and temporarily self-funded by the subsidiaries awaiting banks’ funding. Plasma receivables also include advances to plasma farmers for loan instalments to the banks, advances for fertilisers and other agriculture supplies. These advances shall be reimbursed by the plasma farmers and the collateral in form of titles of ownership of the plasma plantations will be handed over to the plasma farmers once the plasma receivables have been fully repaid. The Group through partnership scheme also provides technical assistance to the plasma farmers to maintain the productivity of plasma plantations as part of the Group’s strategy to strengthen relationship with plasma farmers, which is expected to improve the repayments of plasma receivables. An impairment analysis is performed at each reporting date as disclosed in Note 3.2 to measure ECL. The Group evaluates the concentration of risk with respect to plasma receivables as low, as the cooperatives are dispersed in accordance with the locations of the subsidiaries.
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