Annual Report 2016
119
28. Financial instruments (Cont’d)
28.2 Net (losses) and gains arising from financial instruments
Group Company
2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000
Net (losses)/gains arising on:
Derivatives designated as hedging instrument:
- recognised in other comprehensive income (3,053) (2,985) (3,517) (625)
- recognised in profit or loss 1,280 (2,091) - -
(1,773) (5,076) (3,517) (625)
Loans and receivables 5,428 6,000 25,578 20,166
Available-for-sale financial assets:
- recognised in other comprehensive income (1,584) 1,584 (1,584) 1,584
Financial liabilities measured at amortised cost (25,554) (38,909) (9,715) 1,140
(23,483) (36,401) 10,762 22,265
28.3 Financial risk management
The Group’s and the Company’s financial risk management policy seeks to ensure that adequate financial
resources are available for the Group’s and the Company’s business development. The Group and the Company
have clear defined guidelines and written risk management policies on credit risk, foreign currency risk, liquidity
and cash flow risk. The Group and the Company operate within clearly defined guidelines and do not engage in
speculative transactions.
The Group and the Company have exposure to the following risks from its use of financial instruments:
- Credit risk
- Liquidity risk
- Market risk
28.4 Credit risk
Receivables
Credit risk is the risk of a financial loss to the Group and the Company if a customer or counterparty to a financial
instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its
receivables from customers. The Company’s exposure to credit risk arises principally from loans and advances
to subsidiaries and financial guarantees given to banks for credit facilities granted to subsidiaries.
Risk management objectives, policies and processes for managing the risk
Credit risk is controlled by the application of credit approvals, limits and monitoring procedures. Management
has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations
are performed on all customers requiring credit over a certain amount. The Group and the Company do not have
any significant exposure to any individual counterparty. The Group and the Company have credit policy in place
to ensure that transactions are conducted with creditworthy counterparty.
Notes to the Financial Statements
(Cont’d.)
