MKH Annual Report 2017

39. FINANCIAL INSTRUMENTS Categories of financial instruments The following table analyses the financial assets and liabilities in the statements of financial position by the class of financial instruments to which they are assigned, and therefore by the measurement basis: The Group The Company 2017 2016 2017 2016 RM RM RM RM Financial assets Loans and receivables: Receivables and deposits 224,573,588 188,805,465 300,891,022 212,964,885 Cash, bank balances, term deposits and fixed income funds 264,609,775 305,087,150 12,145,700 267,497 Financial liabilities Other financial liabilities at amortised cost: Payables and accruals 821,705,604 972,231,388 1,344,734 715,364 Loans and borrowings 772,516,817 838,762,794 60,500,000 53,700,721 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. Notes to the Financial Statements For the Financial Year ended 30 September 2017 193 MKH Berhad • Annual Report 2017