APM AUTOMOTIVE HOLDINGS BERHAD
104
NOTES TO THE
FINANCIAL STATEMENTS
35. Financial risk management (continued)
35.1 Credit risk (continued)
Inter company balances
Risk management objectives, policies and processes for managing the risk
The Company provides advances to subsidiaries and monitors the results of the subsidiaries regularly.
Exposure to credit risk, credit quality and collateral
As at the end of the reporting period, the maximum exposure to credit risks is represented by their carrying
amounts in the statement of financial position.
Impairment losses
As at the end of the reporting period, there was no indication that the loans and advances to the
subsidiaries are not recoverable.
Other financial assets
Risk management objectives, policies and processes for managing the risk
The Group and the Company are also exposed to counterparty credit risk from financial institutions through
fund placement activities. These exposures are managed in accordance with the existing guidelines and
procedures that define the parameters within which the investment activities shall be undertaken in order
to achieve the Group’s investment objective of preserving capital and generating additional returns above
appropriate benchmarks within allowable risk parameters. Investments are only made with reputable
licensed financial institutions with high creditworthiness.
Exposure to credit risk, credit quality and collateral
The maximum exposure to credit risk is represented by the carrying amounts in the statement of financial
position.
35.2 Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The
Group’s exposure to liquidity risk arises principally from its various payables, loans and borrowings.
The Group maintains a level of cash and cash equivalent deemed adequate by the management to ensure,
as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.
Certain treasury functions, particularly for wholly-owned subsidiaries, are managed centrally by Group
Treasury to ensure sufficient cash to cover the expected cash demands. Surplus cash held by the
subsidiaries over and above balances required for working capital management are placed in fixed deposits
and money market deposits with appropriate maturities to provide sufficient liquidity to meet the Group’s
liabilities when they fall due.
