Yinson Annual Report 2020

309 Annual Report 2020 42. Financial risk management objectives and policies (continued) (b) Credit risk (continued) (ii) Debt instruments at amortised costs other than trade receivables (continued) As at 31 January 2020, the credit risk of the Group primarily relates to the Group’s 3 (2019: 5) largest customers which accounted for 70% (2019: 75%) of the outstanding trade receivables at the end of the reporting period. The Group believes these counterparties’ credit risk is low taking into consideration of their financial position, past collection experiences and other factors. Except for the impairment loss provided as disclosed in Note 24(a) to the financial statements, management does not expect any counterparty to fail to meet their obligations. (iii) Financial guarantee contracts The Company has issued financial guarantees to banks for borrowings of its subsidiaries. These guarantees are subject to the impairment requirements of MFRS 9. The amounts disclosed below represents the Company’s maximum exposure to credit risk on financial guarantee contracts. Company 2020 2019 RM’000 RM’000 Financial guarantee contracts 1,415,038 515,734 The Company has assessed that its subsidiaries have strong financial capacity to meet the contractual cash flow obligations and hence, does not expect significant credit losses arising from these guarantees. (c) Liquidity risk Liquidity risk is the risk that the Group and the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the Company’s objective are to maintain a balance between continuity of funding and flexibility through the use of bank loans and perpetual securities.