Fraser & Neave Holdings Bhd Annual Report 2021

30. FINANCIAL INSTRUMENTS #CONTINUED$ #D$ 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 financial year, the maximum exposure to credit risk is represented by their carrying amounts in the statement of financial position. These banks and financial institutions have low credit risks. In addition, some of the bank balances are insured by government agencies. Consequently, the Group and the Company are of the view that the loss allowance is not material and hence, it is not provided for. Financial guarantees Risk management objectives, policies and processes for managing the risk The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to a subsidiary. The Company monitors the ability of the subsidiary to service its loans on an individual basis. Exposure to credit risk, credit quality and collateral The maximum exposure to credit risk amounts to RM1,024,000 (2020: RM93,944,000) representing the outstanding banking facilities of the subsidiary as at end of the financial year. The financial guarantees are provided as credit enhancements to the subsidiary’s secured loans. Recognition and measurement of impairment loss As at the end of the financial year, there was no indication that any subsidiary would default on repayment. Inter-company loans and advances Risk management objectives, policies and processes for managing the risk The Company provides unsecured loans and advances to subsidiaries. The Company monitors the ability of the subsidiaries to repay the loans and advances on an individual basis. Exposure to credit risk, credit quality and collateral As at the end of the financial year, the maximum exposure to credit risk is represented by their carrying amounts in the statement of financial position. Loans and advances provided are not secured by any collateral or supported by any other credit enhancements. Recognition and measurement of impairment loss As at the end of the financial year, there was no indication that the loans and advances to the subsidiaries are not recoverable. Financial Statements 235 Fraser & Neave Holdings Bhd ! Annual Report 2021