Annual Report 2012 - IOI Group

NOTES TO THEFINANCIAL STATEMENTS42. FINANCIAL INSTRUMENTS (Continued)42.4 Credit risk (Continued)42.4.2 Credit risk exposures and concentration (Continued)PlantationPropertydevelopmentPropertyinvestmentResource-basedmanufacturing Others TotalRM’000 % RM’000 % RM’000 % RM’000 % RM’000 % RM’000 %Company2012Malaysia 379,391 68 – – – – – – 854,599 53 1,233,990 57Asia (excludingMalaysia) 181,673 32 – – – – – – 91 – 181,764 8Central andEastern Europe – – – – – – – – 757,669 47 757,669 35561,064 100 – – – – – – 1,612,359 100 2,173,423 1002011Malaysia 285,555 69 – – – – – – 1,204,274 38 1,489,829 42Asia (excludingMalaysia) 128,814 31 – – – – – – 1,104,350 35 1,233,164 34Central andEastern Europe – – – – – – – – 866,263 27 866,263 24414,369 100 – – – – – – 3,174,887 100 3,589,256 10042.5 Liquidity and cash flow riskLiquidity or cash flow risk arises when financial resources are insufficient to meet financial obligations as and when they falldue, or have to be met at excessive cost. The Group’s liquidity risk includes non-financial instruments and forward contractobligations.The Group’s liquidity risk management objective is to ensure that all foreseeable funding commitments can be met as andwhen due and in a cost-effective manner.42.5.1 Risk management approachThe Group leverages on IOI Corporation Berhad as the public listed parent company whereby treasury relatedactivities are centralised and where the optimal weighted-average-costs-of funds is managed. The parent companyplays a central liquidity management role where the Group’s longer term funding requirements are managed basedon business and liquidity needs, whilst the day-to-day operational liquidity needs are decentralised at the businessunit level. The Group practises an arm’s-length market based policy with regard to funding costs and encouragesits business units to seek localised trade financing facilities where appropriate.The Group actively manages its debt maturity profile, operating cash flows and the availability of funding so as toensure all operating, investing and financing needs are met. To mitigate liquidity risk, management measures andforecasts its cash commitments, monitors and maintains a level of cash and cash equivalents deemed adequate tofinance the Group’s operations and investment activities. In addition, the Group strives to maintain available bankingfacilities at a reasonable level against its overall debt position.240IOI CORPORATION BERHADAnnual Report 2012