MKH Annual Report 2019

224 A N N U A L R E P O R T 2 0 1 9 40. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s businesses whilst managing its risks. The Group operates within clearly defined guidelines that are approved by the Board and the Group’s policy is not to engage in speculative transactions. The main risks and corresponding management policies arising from the Group’s normal course of business are as follows: (i) Credit risk Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk primarily arises from the receivables. For other financial assets, the Group minimises credit risk by dealing with high credit rating counterparties. The maximum risk associated with recognised financial assets is the carrying amounts as presented in the statements of financial position and corporate guarantee provided by the Company to banks on subsidiaries’ credit facilities. The Group has a credit policy in place and the exposure to credit risk is managed through the application of credit approvals, credit limits and monitoring procedures. The Group determines concentrations of credit risk by monitoring the country of its trade receivables on an ongoing basis. The credit risk concentration profile of the Group’s net trade related receivables at the reporting date are as follows: The Group 2019 2018 RM % of total RM % of total By country: Malaysia 149,341,922 98.08% 210,803,186 99.09% Republic of Indonesia 2,289,022 1.50% 1,323,558 0.62% The Peoples’ Republic of China 640,057 0.42% 624,407 0.29% 152,271,001 100.00% 212,751,151 100.00% The Group does not have any significant exposure to any individual customer at the reporting date. Financial guarantee The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to subsidiaries and creditors for credit terms granted to subsidiaries. The Company monitors on an ongoing basis the repayments made by the subsidiaries and their financial performance. NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019