239 ANNUAL REPORT 2025 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):- Financial/Corporate guarantees The maximum exposure to credit risk amounts to RM25,952,000 (2024: RM44,808,000) representing the outstanding banking facilities arrangement of a related company as at end of the reporting period. The Company provides unsecured corporate guarantees to licensed banks in respect of banking facilities granted to a related company. The Company monitors on an ongoing basis the results of the related company and repayments made by them. As at the end of the reporting period, there was no indication that the related company 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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