ACCOUNTABILITY | FINANCIAL STATEMENTS 311 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 January 2024 41. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) (b) Credit risk (continued) (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 represent the Company’s maximum exposure to credit risk on financial guarantee contracts. Company 2024 RM million 2023 RM million Financial guarantee contracts 5,080 5,375 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. (iv) Financial assets at fair value through profit and loss The Group is exposed to credit risk in relation to other investments and derivatives that are measured at fair value through profit or loss. The impact of this exposure has been assessed as immaterial for both the current and previous financial year. As at 31 January 2024, the credit risk of the Group primarily relates to the Group’s 5 (2023: 4) largest customers which accounted for 92% (2023: 87%) of the outstanding trade receivables, contract assets and finance lease receivables at the end of the reporting period. The Group believes the 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. (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 objectives are to maintain a balance between continuity of funding and flexibility through the use of bank loans and perpetual securities.
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