ANNUAL REPORT 2015 |
185
NOTES TO THE FINANCIAL STATEMENTS
30 June 2015 (cont’d)
36. FINANCIAL INSTRUMENTS (cont’d)
(e) The following table shows a reconciliation of Level 3 fair values:
Group
Company
2015
2014
2015
2014
RM’000
RM’000
RM’000
RM’000
Financial assets
Balance as at 1 July 2014/2013
1,099
1,168
-
-
Disposal
-
(81)
-
-
Translation adjustments
38
12
-
-
Balance as at 30 June 2015/2014
1,137
1,099
-
-
(f) As at the end of reporting period, increase or decrease in fair value of the financial assets would not have any impact
on the post-tax profit of the Group for the year. Therefore, sensitivity analysis for Level 3 fair value measurements is not
presented.
37. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The financial risk management objective of the Group is to optimise value creation for shareholders whilst minimising the
potential adverse impact arising from fluctuations in foreign currency exchange and interest rates and the unpredictability of
the financial markets.
The Group operates within an established risk management philosophy and clearly defined guidelines that are regularly
reviewed by the Board of Directors and does not trade in derivative financial instruments. Financial risk management is carried
out through risk review programmes, internal control systems, insurance programmes and adherence to the Group financial
risk management policies. The Group is exposed mainly to credit risk, liquidity and cash flow risk, interest rate risk and foreign
currency risk. Information on the management of the related exposures is detailed below.
(i) Credit risk
Cash deposits and trade receivables could give rise to credit risk, which requires the loss to be recognised if a counter
party fails to perform as contracted. The counter parties are major international institutions and reputable multinational
organisations. It is the policy of the Group to monitor the financial standing of these counter parties on an ongoing basis
to ensure that the Group is exposed to minimal credit risk.
The primary exposure of the Group to credit risk arises through its trade receivables. The trading terms of the Group with
its customers are mainly on credit, except for boutique sales, where the transactions are done in cash term. The credit
period is generally for a period of 30 days, extending up to 120 days for major customers. Each customer has a maximum
credit limit and the Group seek to maintain strict control over its outstanding receivables to minimise credit risk. Overdue
balances are reviewed regularly by senior management.
Exposure to credit risk
At the end of each reporting period, the maximum exposure of the Group and of the Company 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 15 to the financial
statements.
