Sasbadi Annual Report 2019

PAGE 127 ANNUAL REPORT 2019 FINANCIAL STATEMENTS (continued) 23. Financial instruments (continued) 23.4 Credit risk (continued) Financial guarantees Risk management objectives, policies and processes for managing the risk The Group provides unsecured financial guarantees to banks in respect of banking facilities granted to certain subsidiaries. The Group 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 RM35,022,000 (2018: RM40,693,000) representing the outstanding term loan, bankers acceptance and bank overdrafts of the subsidiaries as at the end of the reporting period. 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. Investments and other financial assets 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. Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the Group has only invested in domestic securities. The maximum exposure to credit risk is represented by the carrying amounts in the statement of financial position. The investments and other financial assets are unsecured.