Annual Report 2012, PDF - Axiata Group Berhad - Investor Relations

Axiata Group Berhad (242188-H) Annual Report 201240. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)(a) Market risks (continued)(iii) Price risk(b) Credit riskThe Group is exposed to equity securities price risk because of the investments held by the Groupclassified on the consolidated statement of financial position as AFS and FVTPL. The Group is notexposed to commodity price risk. No financial instruments or derivatives have been employed to hedgethis risk.Credit risk arises from trade receivables, cash and cash equivalents and financial instruments used in hedgingactivities.The Group has no significant concentration of credit risk due to its diverse customer base. Credit risk ismanaged through the application of credit assessment and approval, credit limit and monitoring procedures.Where appropriate, the Group obtains deposits or bank guarantees from customers.The Group and the Company place its cash and cash equivalents with a number of creditworthy financialinstitutions. The Group’s and the Company policy limit the concentration of financial exposure to any singlefinancial institution.All hedging instruments are executed with creditworthy financial institutions with a view to limiting thecredit risk exposure of the Group and the Company. The Group and the Company, however, are exposedto credit-related losses in the event of non-performance by counterparties to financial derivative instruments,but do not expect any counterparties to fail to meet their obligations.The maximum credit risk exposure of the financial assets of the Group and the Company are approximatelytheir carrying amounts as at the end of the reporting period.The credit quality of the financial assets that are neither past due nor impaired is shown in Note 18 to thefinancial statements.The carrying amount of trade receivables that are past due is shown in Note 33 to the financial statements.(c) Liquidity riskPrudent liquidity risk management implies maintaining sufficient liquid funds to meet its financial obligations.In the management of liquidity risk, the Group and the Company monitors and maintains a level of cash andcash equivalents deemed adequate by the management to finance the Group’s and the Company’soperations and to mitigate the effects of fluctuations in cash flows. Due to the dynamic nature of theunderlying business, the Group and the Company aims at maintaining flexibility in funding by keeping bothcommitted and uncommitted credit lines available.287