NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
45. Financial Instruments (Cont’d)
(a) Financial Risk Management Policies (Cont’d) (ii) Credit Risk
The Group’s exposure to credit risk, or the risk of counterparties defaulting, arises mainly from its trade and other receivables. The Group manages its exposure to credit risk by the application of monitoring procedures on an ongoing basis. For other financial assets (including short-term investments, fixed deposits, and cash and bank balances), the Group minimises credit risk by dealing exclusively with high credit rating counterparties.
Credit risk concentration profile
The Group’s major concentration of credit risk relates to the amounts owing by three (3) customers which constituted approximately 77% of its trade receivables as at the end of the reporting period, due to the Group’s limited number of customers. Based on the Group’s historical collection of these receivables, management believes that they are fully recoverable.
Exposure to credit risk
As at the end of the reporting period, the maximum exposure to credit risk is represented by the carrying amount of the financial assets in the statements of financial position.
Ageing analysis
The ageing analysis of the Group’s trade receivables as at 31 December 2011 is as follows:- Gross Individual Collective Carrying Amount Impairment Impairment Value
The Group RM RM RM RM
Not past due 16,996,961 - - 16,996,961
Past due:-
- less than 3 months 3,589 - - 3,589
--- --- --- ---
17,000,550 - - 17,000,550
============ ============ ============ ============
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
For The Financial Year Ended 31 December 2011
45. Financial Instruments (Cont’d)
(a) Financial Risk Management Policies (Cont’d) (ii) Credit Risk (Cont’d)
Ageing analysis (cont’d)
Trade receivables that are neither past due nor impaired
The trade receivables that are neither past due nor impaired are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the trade receivables.
Trade receivables that are past due but not impaired
The Group believes that no impairment allowance is necessary in respect of these trade receivables. They are substantially companies with good collection track record and no recent history of default.
(iii) Liquidity Risk
Liquidity risk arises mainly from general funding and business activities. The Group manages its debt maturity profile, operating cash flows and availability of funding to ensure that all refinancing, repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities of a reasonable level to its overall debt position. As far as possible, the Group raises committed funding from both capital markets and financial institutions and prudently balances its portfolio with some short-term funding so as to achieve overall cost effectiveness.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
For The Financial Year Ended 31 December 2011
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
For The Financial Year Ended 31 December 2011
45. Financial Instruments (Cont’d)
(a) Financial Risk Management Policies (Cont’d) (iii) Liquidity Risk (Cont’d)
The following table sets out the maturity profile of the financial liabilities as at the end of the reporting period based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on the rates at the end of the reporting period):-
Weighted
Average Contractual On Demand
Effective Carrying Undiscounted Or Within Within Within More Than Rate Amount Cash Flows 1 Year 1 – 2 Years 2 – 5 Years 5 Years
% RM RM RM RM RM RM
The Group 2011
Trade and other payables:-
- interest-bearing 6.80 11,450,000 11,450,000 11,450,000 - - - - non interest-
bearing - 107,512,775 107,512,775 107,512,775 - - -
Borrowings:-
- bank overdrafts 7.40 7,532,547 7,532,547 7,532,547 - - - - bankers’
acceptance 4.24 8,942,000 8,942,000 8,942,000 - - -
- hire purchase
obligations 5.41 4,315,575 4,572,174 2,223,687 1,988,847 359,640 - - Islamic securities
and obligations under Ijarah
arrangements 6.41 70,250,000 76,053,300 35,503,900 32,387,300 8,162,100 - - term loans 4.48 217,413,403 265,802,000 13,188,000 27,301,000 138,951,000 86,362,000 - unsecured loans 3.00 72,520,000 72,520,000 72,520,000 - - -
499,936,300 554,384,796 258,872,909 61,677,147 147,472,740 86,362,000
45. Financial Instruments (Cont’d)
(a) Financial Risk Management Policies (Cont’d) (iii) Liquidity Risk (Cont’d)
The following table sets out the maturity profile of the financial liabilities as at the end of the reporting period based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on the rates at the end of the reporting period) (Cont’d):-
Weighted
Average Contractual On Demand
Effective Carrying Undiscounted Or Within Within Within More Than Rate Amount Cash Flows 1 Year 1 – 2 Years 2 – 5 Years 5 Years
% RM RM RM RM RM RM
The Group 2010
Trade and other payables:-
- interest-bearing 6.02 73,470,006 73,470,006 73,470,006 - - - - non interest
-bearing - 120,930,507 120,930,507 120,930,507 - - -
Borrowings:-
- bank overdrafts 7.73 19,435,493 19,435,493 19,435,493 - - - - bankers’
acceptance 3.85 4,937,000 4,937,000 4,937,000 - - -
- hire purchase
obligations 5.47 504,115 525,289 370,604 130,094 24,591 - - Islamic securities
and obligations under Ijarah
arrangements 5.97 149,500,000 164,090,100 68,844,500 36,585,600 58,660,000 - - term loans 4.79 71,970,000 83,374,000 7,616,000 12,078,000 53,985,000 9,695,000 - unsecured loans 3.00 172,240,000 172,240,000 172,240,000 - - -
612,987,121 639,002,395 467,844,110 48,793,694 112,669,591 9,695,000
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
For The Financial Year Ended 31 December 2011
45. Financial Instruments (Cont’d)
(a) Financial Risk Management Policies (Cont’d) (iii) Liquidity Risk (Cont’d)
The following table sets out the maturity profile of the financial liabilities as at the end of the reporting period based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on the rates at the end of the reporting period) (Cont’d):-
Weighted
Average Contractual On Demand
Effective Carrying Undiscounted Or Within Within Within Rate Amount Cash Flows 1 Year 1 – 2 Years 2 – 5 Years
% RM RM RM RM RM
The Company 2011
Trade and other payables - 4,452,791 4,452,791 4,452,791 - - Hire purchase obligations 4.75 289,740 305,998 136,008 136,008 33,982
4,742,531 4,758,789 4,588,799 136,008 33,982
2010
Trade and other payables - 93,148,513 93,148,513 93,148,513 - -
Bank overdraft - 24,904 24,904 24,904 - -
93,173,417 93,173,417 93,173,417 - -
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
For The Financial Year Ended 31 December 2011
45. Financial Instruments (Cont’d)