cont'd - KNM Steel Sdn Bhd

KNM GROUP BERHAD I Annual Report 2012103Notes to the Financial Statements (cont’d)28. Financial instruments (Cont’d)28.2 Net gains and losses arising from financial instrumentsGroupCompany2012 2011 2012 2011RM’000 RM’000 RM’000 RM’000Net gains/(losses) arising on:Fair value through profit or loss:- Held for trading (“FFEC”) 2,310 (770) – –Loans and receivables (4,983) (63,392) 22,949 22,897Financial liabilities measuredat amortised cost (61,345) (41,067) (21,176) (19,493)(64,018) (105,229) 1,773 3,40428.3 Financial risk management objectives and policiesThe Group has exposure to the following risks from its use of financial instruments:• Credit risk• Liquidity risk• Foreign currency risk• Interest rate riskThe Group’s financial risk management objective is to optimise value creation for shareholders whilstminimising the potential adverse impact arising from its exposure to fluctuations in financial risks.28.4 Credit riskThe Group’s exposure to credit risk arises mainly from external counter-party risk on onerous projectcontracts and on monetary financial assets; whilst, at Company level mainly from internal counter-partyrisk on financial guarantees, loans and advances extended to its subsidiaries.The Group’s objective on credit risk management is to avoid significant exposure to any individualcounter party and to minimise concentration of credit risk. The Group achieves this through its operatingunits practices on credit and credit assessment, and performs central monitoring such as on credit riskconcentration, credit evaluation, and credit impairment; whilst, the business units are responsible for itsrespective day-to-day credit risk management.