EXCEL FORCE MSC BERHAD 107 Notes to the Financial Statements (cont’d) 34. FINANCIAL INSTRUMENTS (CONT’D) (b) Financial risk management objectives and policies (cont’d) (i) Credit risk (cont’d) The Group and the Company have adopted a policy of only dealing with creditworthy counterparties. Management has a credit policy in place to control credit risk by dealing with creditworthy counterparties and deposits with banks and financial institutions with good credit rating. The exposure to credit risk is monitored on an ongoing basis and action will be taken for long outstanding debts. The Company provides unsecured advances to its subsidiary companies. The Company monitors on an ongoing basis the results of the subsidiary company and repayments made by the subsidiary company. At each reporting date, the Group and the Company assess whether any of the receivables are credit impaired. The gross carrying amounts of credit impaired trade receivables are written off (either partial or full) when there is no realistic prospect of recovery. This is generally the case when the Group or the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. Nevertheless, trade receivables that are written off could still be subject to enforcement activities. The carrying amounts of the financial assets recorded on the statements of financial position at the end of the reporting period represents the Group’s and the Company’s maximum exposure to credit risk. The Group has no significant concentration of credit risk except as disclosed in Note 11. The Company has no significant concentration to credit risk except as disclosed in Note 11 and advances to its subsidiary companies where risks of default have been assessed to be low. (ii) Liquidity risk Liquidity risk refers to the risk that theGroup or the Companywill encounter difficulty inmeeting its financial obligations as they fall due. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the Company’s funding requirements and liquidity risk are managed with the objective of meeting business obligations on a timely basis. The Group finances its liquidity through internally generated cash flows and minimises liquidity risk by keeping committed credit lines available. The following table analyses the remaining contractual maturity for financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group and the Company can be required to pay. On demand orwithin 1 year 1 to 2 years Total contractual cash flows Total carrying amount RM RM RM RM 2021 Group Non-derivative financial liabilities Trade payables 369,234 - 369,234 369,234 Other payables 4,125,128 - 4,125,128 4,125,128 Lease liabilities 363,074 332,818 695,892 672,117 4,857,436 332,818 5,190,254 5,166,479
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