Notes to the Consolidated Financial Statements - Uni-Asia Finance ...

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Uni-Asia Finance Corporation Annual Report 2009
Notes to the Consolidated Financial Statements
Year ended 31 December 2009
33. FINANCIAL RISK MANAGEMENT (continued)
(ii)
Credit risk
Credit risk is the risk of loss resulting from the failure of counterparties to meet the terms of their obligations under a financial
instrument or customer contract. The Group is exposed to credit risk from accounts receivable and loan receivables, deposits
with banks and financial institutions, foreign exchange transactions, other financial instruments, and counterparty default
risk from investing activities. The Group seeks to minimize these risks by performing detailed reviews of loan counterparties
or asset issuers and by either selling on participated loans to other parties or entering into offsetting loans payable when
management wishes to preserve the Group’s liquidity.
The Group deals only with customers of good credit standing and the loans are currently extended only to investee or
related companies. Lastly, the business of hotel operation is conducted largely on cash basis. Under special circumstances,
credit may be offered to corporate account holders but this represents a very marginal part of hotel business.
The bank balances and pledged deposits are deposited with creditworthy banks with no recent history of default.
As the Group does not hold any collateral, the maximum exposure to credit risk for each class of financial instruments is the
carrying amount of that class of financial instruments presented on the balance sheet, except as follows:
2009 2008
million million
Corporate guarantees provided to ship manufacturers JPY3,752 JPY3,752
Corporate guarantees provided to bank/ lender US$16 US$8
(iii)
Liquidity risk
The Group manages liquidity risk by maintaining sufficient cash and marketable securities and the availability of funding
through an adequate amount of committed credit facilities and the ability to close out market positions in order to meet
our normal operating commitment and capital investment requirement. The table below analyses the maturity profile
of the Group’s financial assets and liabilities (including derivative financial liabilities) based on contractual undiscounted
cash flows.
less than 3 3-12 1-5 Over 5
months months years years
US$’000 US$’000 US$’000 US$’000
At 31 December 2009
Financial assets
Investments 346 3,282 25,648 13,325
Loans receivable 56 167 4,268 –
Accounts and other receivables 4,394 34 2,476 108
Deposits pledged as collateral 11,785 1,315 – –
Cash and bank balances 53,325 – – –
69,906 4,798 32,392 13,433
Financial liabilities
Interest bearing borrowings (11,161) (23,804) (609) –
Finance lease obligation (2) (7) (12) –
Due to Tokumei Kumiai investors – – (613) –
Retirement benefit allowance – – – (240)
Accounts and other payables (4,351) (80) (197) –
(15,514) (23,891) (1,431) (240)