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notes to the financial statements (cont’d)
for the financial year ended 30 June 2014
JAYA TIASA HOLDINGS BERHAD
120
36. Financial risk management objectives and policies
The Group and the Company are exposed to financial risks arising from their operations and the use of financial
instruments. The Group’s overall risk management strategy seeks to minimise potential adverse effects of financial
performance of the Group. The key financial risks include credit risk, liquidity risk, interest rate risk, foreign currency
risk and commodity price risk.
Financial risk management policies are reviewed and approved by the Board of Directors and executed by the
management of the respective operating units. The Group Risk Management Committee provides independent
oversight to the effectiveness of the risk management process.
During the year, the Group and the Company entered into cross currency swap and forward currency contracts.
Control and monitoring procedures include, amongst others, setting of trading limits and the manner and timing of
management reporting. Such derivative trading is also under the close supervision of an executive director. These
control procedures are periodically reviewed and enhanced where necessary in response to changes in market
conditions. The Group and the Company do not apply hedge accounting.
The following sections provide details regarding the Group and Company’s exposure to the above-mentioned financial
risks and the objectives, policies and processes for the management of these risks.
(a) Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default
on its obligations. At the reporting date, the Group and the Company’s exposure to credit risk arises primarily
from trade and other receivables.
The Group and the Company manage their credit risk by trading only with recognised and creditworthy third
parties. In addition, receivable balances are monitored on an ongoing basis and the Group and the Company’s
exposure to bad debts is not significant. Since the Group and the Company trade only with recognised and
creditworthy third parties, there is no requirement for collateral.
Exposure to credit risk
At the reporting date, the Group and the Company’s maximum exposure to credit risk is represented by:
(i)
the carrying amount of each class of financial assets recognised in the statements of financial position
including derivatives with positive fair values.
(ii)
A nominal amount of RM716,074,517 (2013: RM945,281,255) relating to corporate guarantees provided
by the Company to banks on subsidiaries’ loans and borrowings.
Credit risk concentration profile
The Group determines concentrations of credit risk by monitoring the country of its trade receivables on an
ongoing basis. The credit risk concentration profile of the Group’s trade receivables at the reporting date are
as follows:
Group
2014
2013
RM’000
% of total
RM’000
% of total
By country:
India
4,550
6
–
–
Japan
–
–
1,800
2
Korea
3,556
4
6,127
6
Malaysia
31,664
39
37,150
36
Middle East
2,283
3
–
–
Papua New Guinea
2,252
3
4,422
4
People’s Republic of China
–
–
20,517
20
Singapore
3,788
5
8,653
8
Taiwan
27,163
33
19,494
19
Vietnam
2,637
3
1,536
1
Other countries
3,691
4
4,444
4
81,584
100
104,143
100