124
JAYA TIASA HOLDINGS BERHAD
Notes to the Financial Statements (cont’d)
for the financial year ended 30 June 2015
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.
The Group and the Company utilise cross currency swaps 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’s 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’s 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’s 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’s 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 RM1,410,815,000 (2014: RM1,174,765,000) 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
2015
2014
RM’000
% of total
RM’000
% of total
By country:
India
19,786
25
4,550
6
Korea
9,012
12
3,556
4
Malaysia
37,593
49
31,664
39
Middle East
–
–
2,283
3
Papua New Guinea
–
–
2,252
3
Singapore
3,163
4
3,788
5
Taiwan
–
–
27,163
33
Vietnam
2,386
3
2,637
3
Other countries
5,352
7
3,691
4
77,292
100
81,584
100
