Press Metal Aluminium Holdings Berhad SECTION 6 • FINANCIAL STATEMENTS 306 Notes to the Financial Statements 28. FINANCIAL INSTRUMENTS (CONT’D) 28.4 Credit risk (cont’d) Financial guarantees Risk management objectives, policies and processes for managing the risk The Company provides unsecured financial guarantees to banks in respect of banking facilities and credit terms granted to certain subsidiaries. The Company monitors the ability of the subsidiaries to fulfil the contracts and service their repayments on an individual basis. Exposure to credit risk, credit quality and collateral The maximum exposure to credit risk of the Company amounts to RM997,932,000 (2023: RM712,039,000) as at the end of the reporting period. Recognition and measurement of impairment loss The Company assumes that there is a significant increase in credit risk when a subsidiary’s financial position deteriorates significantly. The Company considers a financial guarantee to be credit impaired when: • The subsidiary is unlikely to repay its credit obligation to the bank in full; or • The subsidiary is unlikely to repay its amounts owing to the supplier in full; or • The subsidiary is continuously loss making and is having a deficit shareholders’ fund. The Company determines the probability of default of the guaranteed loans individually using internal information available. As at the end of the reporting period, there was no indication that any subsidiary would default on repayment. The financial guarantees have not been recognised since the fair value on initial recognition was not material. Inter-company receivables and loans and advances Risk management objectives, policies and processes for managing the risk The Group trades with an associate and provides unsecured advances to an associate. The Company provides unsecured loans and advances to subsidiaries. The Group and the Company monitor the ability of the subsidiaries and associates to repay the loans and advances on an individual basis.
RkJQdWJsaXNoZXIy NDgzMzc=