201 ANNUAL REPORT 2024 MST GOLF GROUP BERHAD 33. FINANCIAL INSTRUMENTS (CONT’D) 33.2 Financial risk management objectives and policies (cont’d) Financial risk (cont’d) The main areas of financial risks faced by the Group and the Company and the policy in respect of the major areas of treasury activity are set out as follows (cont’d):- (a) Credit risk (cont’d) Following are the areas where the Group and the Company are exposed to credit risk (cont’d):- Other receivables The maximum exposure to credit risk is represented by their carrying amounts in the statements of financial position. Cash and cash equivalents The credit risk for cash and cash equivalents are considered negligible, since the counter parties are reputable banks with high quality external credit ratings. Intercompany loans and advances The maximum exposure to credit risk is represented by their carrying amounts in the statements of financial position. The Company provides unsecured advances to subsidiaries and monitors the results of the subsidiaries regularly. As at the end of the reporting date, there was no indication that advances to the subsidiaries are not recoverable. Financial/Corporate guarantees The maximum exposure to credit risk amounts to RM91,744,000 (2023: RM83,236,000) representing the outstanding banking facilities arrangement of the subsidiaries as at end of the reporting period. The Company provides unsecured corporate guarantees to licensed banks in respect of banking facilities granted to certain subsidiaries. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by them. As at the end of the reporting period, there was no indication that any subsidiaries would default on repayment. (b) Liquidity risk Liquidity risk is the risk that the Group and the Company will not be able to meet their financial obligations as they fall due to shortage of funds. In managing its exposures to liquidity risk arises principally from its various payables, the Group and the Company maintain a level of cash and cash equivalents and bank facilities deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due. The Group and the Company aim at maintaining a balance of sufficient cash and deposits and flexibility in funding by keeping sources of committed and uncommitted credit facilities from various banks.
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