ANNUAL REPORT 2012 - Wawasan TKH Holdings Berhad

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WAWASAN TKH HOLDINGS BERHAD (540218-A) ANNUAL REPORT 2012 089 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2012 (cont’d) 27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group’s financial risk management objective is to optimise value creation for shareholders whilst minimising the potential adverse impact arising from fluctuations in foreign currency exchange and interest rates and the unpredictability of the financial markets. The Group is exposed mainly to credit risk, liquidity and cash flow risk, interest rate risk and foreign currency risk. Information on the management of the related exposures is detailed below: (i) Credit risk Cash deposits and trade receivables may give rise to credit risk, which requires the loss to be recognised if a counter party fails to perform as contracted. It is the Group’s policy to monitor the financial standing of these counter parties on an ongoing basis to ensure that the Group is exposed to minimal credit risk. The Group’s primary exposure to credit risk arises through its trade receivables. The Group’s trading terms with its customers are mainly on credit, except for new customers, where deposits in advance are normally required. The credit period is generally for a period of one (1) month, extending up to three (3) months for major customers. Informal credit evaluations are performed on all customers requiring credit over a certain amount. The Group seeks to maintain strict control over its outstanding receivables and overdue balances are reviewed regularly by senior management. 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 amount of each class of financial assets recognised in the statements of financial position, including derivatives with positive fair values. Information regarding credit enhancements for trade and other receivables is disclosed in Note 11 to the financial statements. Credit risk concentration profile The Group determines concentration of credit risk by monitoring the sales segment and industry sector profiles of its trade receivables on an ongoing basis. The credit risk concentration profiles of the Group’s trade receivables at the end of the reporting period are as follows: By sales segment Domestic Overseas 2012 RM’000 % of total 3,238 3,311 49 51 Group 2011 RM’000 % of total 4,412 3,846 53 47 6,549 100 8,258 100 By industry sectors Trading Manufacturing 4,765 1,784 73 27 5,309 2,949 64 36 6,549 100 8,258 100 Financial assets that are neither past due nor impaired Information regarding credit enhancements for trade and other receivables is disclosed in Note 11 to the financial statements. Deposits with banks and other financial institutions and derivatives that are neither past due nor impaired are placed with or entered into with reputable financial institutions 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 11 to the financial statements.
090 WAWASAN TKH HOLDINGS BERHAD (540218-A) ANNUAL REPORT 2012 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2012 (cont’d) 27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d) (ii) Liquidity and cash flow risk Prudent liquidity and cash flow risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities. The Group actively manages their cash flows and the availability of funding so as to ensure all operating, investing and financing needs are met. To mitigate liquidity risk, the Group requires financial support from its corporate shareholder, WTKHSB to finance the Group’s operations and meet its obligations as and when they fall due. The Group monitors liquidity risk of its loans and borrowings (including overdrafts) that should mature in the next one year period to maintain sufficient liquid financial assets and stand-by credit facilities with different banks. The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the end of the reporting period based on contractual undiscounted repayment obligations. 2012 Group On demand or within one year RM’000 One to five years RM’000 Over five years RM’000 Total RM’000 Financial liabilities: Trade and other payables Borrowings Derivatives 13,917 15,820 23 26,557 17,241 - 26,557 17,020 - 67,031 50,081 23 Total undiscounted financial liabilities 29,760 43,798 43,577 117,135 Company Financial liabilities: Trade and other payables 344 26,557 26,557 53,458 Total undiscounted financial liabilities 344 26,557 26,557 53,458 Group On demand or within one year RM’000 2011 One to five years RM’000 Over five years RM’000 Total RM’000 Financial liabilities: Trade and other payables Borrowings Derivatives 17,776 19,211 46 27,060 13,393 - 27,059 18,698 - 71,895 51,302 46 Total undiscounted financial liabilities 37,033 40,453 45,757 123,243 Company Financial liabilities Trade and other payables 1,211 27,060 27,059 55,330 Total undiscounted financial liabilities 1,211 27,060 27,059 55,330
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WAWASAN TKH HOLDINGS BERHAD (540218
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002 CORPORATE INFORMATION BOARD OF
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004 CHAIRMAN’S STATEMENT (cont’
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006 DIRECTORS' PROFILE ____________
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008 DIRECTORS' PROFILE (cont’d) Y
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010 STATEMENT ON CORPORATE GOVERNAN
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016 STATEMENT ON RISK MANAGEMENT &
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018 AUDIT COMMITTEE REPORT (cont’
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020 WAWASAN TKH HOLDINGS BERHAD (54
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ANNUAL REPORT 2012 - Wawasan TKH Holdings Berhad

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