DESTINI Annual Report 2020

38. Financial Instruments (Cont’d) (b) Net gain and losses arising from financial instruments (c) 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 and of the Company operations whilst managing its financial risks, including credit, liquidity, foreign currency, interest rate and market price risks. The Group and the Company operate within clearly defined guidelines that are approved by the Board and the Group’s and of the Company’s policy is not to engage in speculative transactions. The following sections provide details regarding the Group’s exposure to the abovementioned financial risks and the objectives, policies and processes for the management of these risks. (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 and the Company’s exposure to credit risk arises principally from its receivables from customers and deposits with banks and financial institutions. The Company’s exposure to credit risk arises principally from loans and advances to subsidiaries and financial guarantees given to banks for credit facilities granted to subsidiaries. There are no significant changes as compared to prior periods. 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 deposit with banks and financial institutions with good credit rating. The exposure to credit risk is monitored on an ongoing basis and action will be taken for long outstanding debts. At each reporting date, the Group and the Company assess whether any if the receivables and contract assets are credit impaired. The gross carrying amounts of credit impaired trade receivables and contract assets are written off (either partial or full) when there is no realistic prospect of recovery. This is generally the case when the Group or the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. Nevertheless, trade receivables and contract assets 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 financial year represent the Group’s and the Company’s maximum exposure to credit risk except for financial guarantees provided to banks for banking facilities granted tocertain subsidiaries. TheCompany’s maximum exposure in this respect is RM111,916,489 (2019: RM111,916,489), representing the outstanding banking facilities of the subsidiaries as at the end of the reporting period. There was no indication that any subsidiary would default on repayment as at the end of the reporting period. Group Company 2020 2019 2020 2019 RM RM RM RM Financial assets at FVTPL 3,436,456 430,134 3,436,456 430,134 Net loss on impairment of financial instruments -Financial assets at amortised cost 12,144,489 58,174,680 - 16,968,990 ANNUAL REPORT 2020 DESTINI BERHAD Notes to Financial Statements 181