3 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 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 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 statement of financial position. In addition, the Company is
exposed to credit risk arising from the financial guarantee contract as disclosed in Note 3(b).
Financial assets that are neither past due nor impaired
Information regarding trade receivables that are neither past due nor impaired is disclosed in Note 25.
Financial assets that are either past due or impaired
Information regarding trade receivables that are either past due or impaired is disclosed in Note 25. Apart from those
disclosed above, none of other financial assets is either past due or impaired.
261
KPJ Healthcare Berhad
Annual Report
2015
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)
