251 FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS ʹˢ˥ ˧˛˘ Ѓˡ˔ˡ˖˜˔˟ ˬ˘˔˥ ˘ˡ˗˘˗ ʦʤ ʷ˘˖˘ˠ˕˘˥ ʥʣʥʧ (cont’d) 45. FINANCIAL INSTRUMENTS (CONT’D) (b) Financial risk management objectives and policies The Group’s and the Company’s financial risk management policy is to ensure that adequate financial resources are available for the development of the Group’s and of the Company’s operation whilst managing its credit, liquidity and market risks. The Group and the Company operate within clearly defined guidelines that are approved by the Board and the Group’s and the Company’s policy is not to engage in speculative transactions. (i) Credit risk Credit risk is the risk of a financial loss to the Group and to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its financing receivables, trade and other receivables, amount due from associates, amount due from joint ventures, deposits with licensed banks, and cash and cash equivalents. The Company’s exposure to credit risk arises principally from trade and other receivables, amount due from subsidiaries, amount due from associates, amount due from joint ventures, deposits with licensed banks, and cash and cash equivalents. There are no significant changes as compared to prior financial year. 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 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 subsidiaries. It also provides unsecured financial guarantees to banks for banking facilities granted to certain subsidiaries. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by the subsidiaries. At each reporting date, the Group and the Company assess whether any if the financing, trade and other receivables, amount due from subsidiaries, amount due from associates and amount due from joint ventures are credit impaired. The gross carrying amounts of credit impaired receivables are written off (either partially or full) when there is no prospect of recovery. This is generally the case when the Group and the Company determine that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay amounts subject to the write-off. Nevertheless, 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 represent the Group’s and the Company’s maximum exposure to credit risk except for financial guarantees provided to banks for banking facilities granted to certain subsidiaries and performance bond given to third parties. The Group’s and the Company’s maximum exposure in this respect are RM7,682,000 and RM32,842,000 (2023: RM6,651,000 and RM63,771,000) respectively, representing the financial guarantee given to the third parties and certain subsidiaries as at the end of the reporting period. There was no indication that any subsidiaries would default on repayment as at the end of the reporting period. There are no significant changes as compared to previous financial year.
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