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115

notes to the

financial statements

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010 (cont’d)

2 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) Financial risk management (continued) 2.1 Financial risk factors (continued)

a) Market risk (continued) (iii) Price risk

The Group is not exposed to equity securities price risk as the quoted investment in Al-‘Aqar KPJ REIT held by

subsidiaries is classifed as interest in associates at group level.

Other investments are unquoted and exposure to price risk is insignifcant.

b) Credit risk

Exposure to credit risk arises mainly from sales of products and services made on deferred credit terms, cash and

cash equivalents, deposits with fnancial institutions. Risk arising from there are minimised through effective monitoring of receivable accounts that exceeded the stipulated credit terms. Credit limits are set and credit history is reviewed to minimise potential losses. The credit worthiness of all counter parties are periodically reviewed should they exceed their credit terms and limit, with the approval of the management. The Group has no signifcant concentration of credit risk with any single customer.

The Group seeks to invest cash assets safely and proftability and buys insurance to protect itself against insurable risk.

In this regard, counterparties are assessed for credit limits that are set to minimise any potential losses. The Group’s cash and cash equivalents and short term deposits are placed with creditworthy fnancial institutions and the risks arising therefrom are minimised in view of the fnancial strength of these fnancial institution.

At the Company level, credit risk arises from amounts due from subsidiaries, cash and cash equivalents and deposits with

fnancial institutions. The Company’s exposure to bad debt is not signifcant since the subsidiaries do not have historical default risk. The Company also manages its credit risk by performing regular reviews of the ageing profle of amounts due from subsidiaries.

Financial assets that are neither past due nor impaired

Information regarding trade receivables that are neither past due nor impaired is disclosed in Note 27. Cash and cash

equivalents that are neither past due nor impaired are placed with or entered into with reputable fnancial institutions.

Financial assets that are either past due or impaired

Information regarding trade receivables that are either past due or impaired is disclosed in Note 27.

Apart from those disclosed above, none of other fnancial assets is either past due or impaired.

c) Liquidity risk

Prudent liquidity risk management implies maintaining suffcient cash to meet the obligations as and when they fall due.

The Group manages its liquidity risk with the view to maintaining a healthy level of cash and cash equivalents appropriate to the operating environment and expected cash fows of the Group.

Cash fow forecasting is performed by the subsidiaries and aggregated by Group fnance. Group fnance monitors rolling

forecasts of the Group’s liquidity requirements to ensure it has suffcient cash to meet operational needs while maintaining suffcient headroom on its undrawn committed borrowing facilities (Note 31) at all times so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities. Such forecasting takes into consideration the Group’s debt fnancing plans, covenant compliance and compliance with internal balance sheet ratio targets.

Surplus cash held by the operating entities over and above balance required for working capital management are

transferred to the Group treasury. Group treasury will invests surplus cash in interest bearing current accounts and fxed deposits to provide suffcient headroom as determined by the above-mentioned cash fows of the Group. At the reporting date, the Group held money in fxed deposit of RM74,622,000 less pledged fxed deposits of RM5,299,000 that is expected to readily generate cash infows for managing liquidity risk.