Uster Technologies Ltd | Annual Report 2009 Uster Technologies ...

Deferred income tax assets are recognized for all carry forwards of unused tax credits and unused tax lossesto the extent that it is probable that taxable profit will be available against which the deductible temporarydifferences and the carry forwards of unused tax credits and losses can be utilized.Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the yearwhen the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted orsubstantively enacted at the reporting date.Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right existsto set off current tax assets against current income tax liabilities and the deferred income taxes relate to thesame taxable entity and the same taxation authority.A provision is made for non-recoverable withholding taxes on undistributed earnings of foreign subsidiaries.4 Financial Risk ManagementThe Uster Group is exposed to the following risks from its use of financial instruments:• Credit risk• Liquidity risk• Market riskIncluded in this note is information regarding the Group’s exposure to each of these risks, the Group’s objectives,policies and processes for measuring and managing risks as well as information about the managementof capital.The Board of Directors has set up the Group’s financial risk management framework. The Executive Committeeagrees policies for managing each of the risks and monitors them on a regular basis. The Audit Committeeis responsible to judge the risk assessment established by the Executive Committee and the proposedmeasures to reduce risks. It evaluates at regular intervals the financial risk management and monitoringprocedures of the Executive Committee.4.1 Credit RiskCredit risk means the risk to suffer a financial loss if a customer or counterparty to a financial instrumentdoes not meet the contractual obligations. It arises principally from the Group’s accounts receivable trade.Generally it is the policy of the Group to work in emerging countries with secured payment terms such ase. g. letters of credit and prepayments in hard currencies like CHF, EUR, USD or in cases where this is notpossible to insure the revenue at SERV (Swiss Export Risk Insurance) or similar trade financing concepts.This policy is applied with new customers as well as with existing customers. If customers wish to trade oncredit terms, it is the Group’s policy that these customers are subject to credit verification procedures. Inaddition receivable balances are monitored on an ongoing basis with the result that the Group’s exposure tolosses is not considered significant.With respect to credit risks arising from other financial assets, the Group’s exposure to credit risks has amaximum exposure equal to the carrying amount of these financial assets. Since Uster maintains bankingrelations with first-class financial institutions, the risk is considered minimal.Uster Group – Notes to the Consolidated Financial Statements 2009 69