41. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments.
The key financial risks include credit risk, liquidity risk, interest rate risk and foreign currency risk.
The following sections provide details regarding the Group’s and the Company’s exposure to the above-mentioned financial
risks and the objectives, policies and processes for the management of these risks.
(a) Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its
obligations. The Group’s and the Company’s exposure to credit risk arises mainly from revenue made on deferred credit
terms, trade and other receivables, cash and cash equivalents, and deposits with financial institutions. Risk arising from
these 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 Group has no significant concentration of
credit risk with any single customer.
The Group seeks to invest cash assets safely and profitability 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 financial institutions and the risks arising
there from are minimised in view of the financial strength of these financial institutions.
The Company provides unsecured financial guarantee to banks in respect of banking facilities granted to a subsidiary.
The Company monitors on an ongoing basis the results of the subsidiary and the repayment made by the subsidiary. As
at end of the reporting date, there was no indication that the subsidiary would default on repayment. The financial
guarantees have not been recognised since the fair value on initial recognition was not material.
Exposure to credit risk
At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by:
– The carrying amount of each class of financial assets recognised in the statements of financial position.
Information regarding credit enhancements for trade and other receivables is disclosed in
Note 22
.
Financial assets that are neither past due or impaired
Information regarding trade receivables that are neither past due nor impaired is disclosed in
Note 22
. Cash and cash
equivalents that are neither past due nor impaired are placed with or entered into with reputable financial 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 22
.
Apart from those disclosed above, none of other financial assets is either past due or impaired.
290
KPJ Healthcare Berhad annual report
2014
Notes to the
Financial Statements
For the financial year ended 31 December 2014 (continued)
