27. CAPITAL AND FINANCIAL RISK MANAGEMENT (continued) (b) Financial risk management (continued) i) Credit risk (continued) Cash and cash equivalents The cash and cash equivalents are held with banks and financial institutions. As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the statements of financial position. These banks and financial institutions have low credit risk. Consequently, the Group and the Company are of the view that the loss allowance is not material and hence, it is not provided for. Information regarding credit risk for cash and cash equivalents is disclosed in Note 16(c) to the financial statements. Financial guarantees Risk management objectives, policies and processes for managing the risk The Company provides unsecured financial guarantees to financial institutions in respect of banking facilities granted to its subsidiaries. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by the subsidiaries. Exposure to credit risk, credit quality and collateral The maximum exposure to credit risk amounts to RM15,951,000 (2024: RM5,822,000) representing the outstanding term loan, bankers’ acceptances and bank overdrafts of the subsidiaries as at the end of the reporting period. Maturity profile of financial guarantee contracts of the Company at the end of each reporting period based on contractual undiscounted repayment obligations, is repayable upon any default by the subsidiaries in respect of the guaranteed bank facilities. 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. The Directors are of the view that the chances of the financial institutions calling upon the guarantees are remote. The resulting loss allowance is not material and hence, it is not provided for. Other investments Risk management objectives, policies and processes for managing the risk Investments are allowed only in liquid securities and only with counterparties that have a credit rating equal to or better than the Group. Transactions involving derivative financial instruments, if any, are with approved financial institutions. Information regarding credit risk for other investments is disclosed in Note 9(b) to the financial statements. The management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on customers requiring credit over a certain period. There are no significant changes as compared to prior periods. ANNUAL REPORT 2025 Financial Statements (conঞ nued) 145
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