Annual Report 2011 - Food Junction

Notes to the Financial Statements (cont’d)
31 December 2011
24. Financial risk management objectives and policies (cont’d)
Foreign currency risk (cont’d)
Sensitivity analysis for foreign currency risk
The following table demonstrates the sensitivity of the Group’s profit after tax to a reasonably possible
change in the USD exchange rates (against the respective functional currencies of the Group entities),
with all other variables held constant.
Group
Profit after taxation
2011 2010
$’000 $’000
Rupiah - strengthened 1% (2010: 1%) 1 –
- weakened 1% (2010: 1%) (1) –
Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty
default on its obligations. The Group’s and the Company’s exposures to credit risk arises primarily
from other receivables. The Group does not have credit risk exposure from the tenants. It is the
Group’s policy that all tenants need to place a deposit before the Group license the stall to the tenants.
In addition, the Group collects sales collection on behalf of the tenants and returns the net collections
to the tenants upon settlement. For other financial assets (include cash and cash equivalents, and
fixed deposits), the Group and the Company minimises credit risk by dealing exclusively with reputable
and well-established local and foreign banks with high credit ratings and no history of defaults.
Exposure to credit risk
At the end of the reporting period, the Group’s and the Company’s maximum exposure to credit risk is
represented by:
– The carrying amounts of each class of financial assets recognised in the balance sheets
– A nominal amount of $2,500,000 (2010: $2,500,000) relating to a corporate guarantee provided
by the Company to a bank on subsidiary company’s rent and service charge payable to the
landlord
No other financial assets carry a significant exposure to credit risk.
Credit risk concentration profile
The Group and the Company have no significant concentration of credit risk.
Financial assets that are neither past due nor impaired
Other receivables that are neither past due nor impaired are creditworthy debtors with good payment
records with the Group. Cash and bank balances, and fixed deposits are placed with reputable and
well-established local and foreign banks with high credit ratings and no history of default.
Financial assets that are either past due or impaired
Information regarding financial assets that are either past due or impaired is disclosed in Note 4.
Annual Report 87